“Worker’s Compensation Insurance-This type of insurance covers the injury of an employee (medical costs, injury income, rehabilitation, legal, retraining in the event of permanent disability, and a life insurance benefit) on the job (your job). This insurance is the most expensive of the three, by far, and is the one that most tree services don’t carry. If a worker gets hurt on your property and his company (that you hired) does not have worker’s compensation, the injured employee can sue you and your homeowner’s insurance very well may not cover it.
On Dateline NBC on Sunday, August 13, 2006 they did a piece about using unlicensed contractors. One of their examples was a tree service that did not carry worker’s compensation insurance. If a tree climber got hurt on the job (a likely scenario) and his company did not carry worker’s compensation, he could sue the homeowner for everything he had. In a seperate instance in a 2002 Court of Appeals decision, Fernandez v. Lawson,119, a tree worker fell and was seriously injured. His employer did not have worker’s compensation so he sued the homeowner and won. The homeowner’s policy did not cover the accident because, according to the court, “This type of dangerous work does not come within the household employee exception for coverage under the federal Occupational Safety and Health Administration rules”. The homeowner was stuck for the entire amount. Although many California tree services do not carry this, this type of insurance is required by California State law.”