“It won’t happen to me…” You care deeply about your business.  You have cultivated a culture of safety. You have invested in dust collection, spray booths, automatic suppression, UL-approved self-closing rag containers, and other loss control measures.  “It won’t happen to me” is not an unreasonable thought to have, but it is a very dangerous one.  

We recently worked with the owners of a wood product business, kept in the family for multiple generations. They were doing all the right things, too, until they got a phone call late in the evening letting them know their livelihood was ablaze and several fire companies were taking a defensive position.

For many woodworking businesses, such a catastrophe might have shuttered the business. But in this case, the owners had a comprehensive insurance policy with an insurance carrier in the wood niche that they trusted. As a result, the company was able to receive an advance payment quickly, limiting its business interruption by jump-starting its rebuilding process. Today, the company is back to operation, servicing its long-time customers.

This real-life scenario shows the tremendous value insurers can provide to woodworking businesses. Yet with policy costs on the rise, some business owners may be wondering whether their insurance policies are truly worth the price tag in 2025. The answer is a resounding yes.

One way to change that perception around insurance is to educate business owners on why it’s important, what goes into the pricing and how the right insurance partners can not only provide a good policy but teach a business owner to better safeguard a company’s operations and help the business grow.

Flipping the script
Insurance is an investment in the health and well-being of a woodworking business. But it is often viewed as a necessary evil. One contributor to that thinking is that many companies’ premiums have been rising steadily over the past half-decade.

Unfortunately, these increases have been unavoidable due to social inflation and other macroeconomic trends. Consider that building materials today cost more than they did five years ago. Vehicle prices continue to rise, impacting company fleets. Repair and replacement costs are escalating, too, along with the expense of defending lawsuits that result from accidents, employee injuries, and other covered losses. Construction defect claims are rising in cost and frequency. And of course, climate risk and natural disasters continue to cause significant damages across the country. All of these increasing expenses directly impact the cost of a general liability or auto policy.

Yet there is light at the end of the tunnel, because the insurance paradigm is moving away from repair-and-replace and toward predict-and-prevent. For example, carriers today can recommend technologies like telematics and video cameras so woodworking businesses can reduce their auto-related risks and prevent claims. The better our industry gets at identifying and mitigating potential hazards, the higher value we’ll bring to our customers.

Looking beyond the sticker price
At its core, insurance is a risk transfer mechanism, and each policy will spell out the specific financial benefits a business owner is entitled to receive in the event of a covered loss. However, companies will derive significant value beyond the policy limits by partnering with an insurer who understands the nuances of the woodworking industry. Potential benefits include:

1. Customized solutions. Compared to businesses in other industries, woodworking companies face unique exposures, such as fire risks from oil-soaked finishing rags that aren’t disposed of properly. A trusted insurer who understands woodworking will use their industry expertise to account for these types of unique exposures. They will then customize your policy and risk mitigation techniques accordingly.

2. Smoother claims resolutions. In the unfortunate event of a covered loss, business owners need an insurer that will respond quickly and appropriately. Carriers that specialize in covering wood products businesses will have a team of adjusters who understand woodworking facilities—and the common claims associated with them—streamlining the entire claims process.

3. Expert loss control strategies. With proper risk mitigation techniques, businesses can reduce their exposures and even save money on policy costs. Seek insurers who are skilled at spotting hazardous conditions in woodworking businesses and sharing best practices, including loss control guides and on-site training to prevent slip-and-fall accidents and improve dust collection practices.

4. Insights into the latest trends and coverages. When Pennsylvania Lumbermens Mutual Insurance Company (PLM) began in 1895, we focused on protecting wood products and building material businesses from their chief risk—fire. Today, while fire remains the leading cause of property damage in the industry, we are seeing an increase in the severity of other exposures too. Chief among them include cyber exposures related to the rise of data breaches and hacks, and auto accidents due to escalating fleet risks. Additionally, PLM and other insurers are actively working to find solutions to the “plaintiff’s bar”—the escalating number of lawyers who represent clients seeking compensation or damages from insurers and businesses following injuries or accidents.

5. Capital to expand into new markets. Woodworking businesses that reduce their risk exposure successfully can drive down the cost of insurance significantly. As a result, they will have more resources to invest in growing their books of business and expanding their companies.

Can I go without insurance?
While it might be tempting, operating a company without a safety net is not wise. In a high severity niche like lumber, one accident or incident could do enough damage to shut down the business for good. Some companies, however, have explored the idea of self-insuring, yet doing so is often cost-prohibitive and overly complex.

Business owners considering self-insurance must set aside enough capital to ensure they are covered in the event of a loss. They also must take on all the back-end work of claims processing—everything from filing paperwork to hiring attorneys and defending lawsuits. Without a tangible plan in place to address all of this—and a robust culture of safety—the idea of self-insurance is a non-starter for many.

Finding the right insurer
No business owner wants to learn the news that the company they worked so hard to build has been reduced to embers by a fire. That’s why finding the right insurance company is essential for woodworking company owners. Seek carriers who will discuss crucial considerations such as business income, building valuations and stock valuations. The right insurer will also know the intricacies of the woodworking industry and offer personalized loss prevention resources, empowering business owners to gain the maximum value from their policies.

About the author
Stephen Hicks, MBA, is the vice president of underwriting at Pennsylvania Lumbermens Mutual Insurance Company (PLM). PLM is a nationally recognized property and casualty insurance carrier serving the lumber, woodworking and building materials industries. Email Stephen at [email protected] or for more information on PLM visit plmins.com.