LLC and insurace

21 posts in this topic

Posted · Report post

I saw the other post on insurance and didn't want to junk it up with my slightly off topic posts, so I made my own thread. My questions is about insurance, but not as it relates to a business, but as to a hobby.

I have been asked to demo for various groups (all at their locations,) but some of them require me to carry insurance. I'm thinking that if I become an LLC, then the most I could get sued for would be anything I have under the LLC name. At this time, that would amount to nothing.

My forge is in my shed, and that is covered under home owners, so I really only need something for the demos. Do they offer such a thing?


Small rant after doing some google research: I love how somebody could knock down my "keep away hot work" fence at demos, drunkly stumble in my forge, knock my anvil over, pick up MY hammer, hurt themselves with it, and then sue me! That is just messed up!

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Posted · Report post

as far as the advice I've been given from my accountant and others, an LLC or a Corp. will only slow down a law suit. If the company has no $$ they just go up the food chain until they find the $$. Insurance is your best bet.

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Posted · Report post

aaah, the sue happy US. Why work when you can sue someone to pay for your life.

Good luck with your search for an insurer, and hope it is never needed.

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Posted · Report post


SNIP

My forge is in my shed, and that is covered under home owners, so I really only need something for the demos. Do they offer such a thing?

SNIP


I'm afraid I can't offer advice on finding insurance. But if you smith for a living (or maybe even just some profit) you may or may not be covered by home owners. Some insurance companies have different policies for "home" and "home based business". At least that is something I've heard, I'm not a doctor and don't play one on T.V. ;)

Good luck.

ron

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Posted · Report post

Right now, smithing is just a hobby. I have not sold a signal piece of work. Nor do I expect to anytime soon. Long term plan is to be able to earn enough to buy more coal and metal.

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Posted · Report post

If it's just a hobby, check to see if your home owners covers you. I've also heard that as a hobbyist some home owners insurance will cover you if you are engaged in your hobby away from home. Again I'm not a doctor nor do I play one on T.V.

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Posted · Report post

I recently had the same quandry with needing insurance. Abana used to have an insurance program through Hartford. It was not easy to get. They now have a better plan, that will cover your shop as well as liability for you to do demos. Do not become an llc or corp.. A sole proprietorship is the best way to go. I have a mil. in liability and it runs about $116 every quarter.

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Posted · Report post


Do not become an llc or corp.. A sole proprietorship is the best way to go.


This is only true if you have minimal assets aside from your shop. If someone sues you and your insurance doesn't cover it, as a SP your tools aren't the only thing that can disappear. A single member LLC only offers slightly more protection, as it is still very obvious from a courts perspective that you and the business are the same thing. Your personal assets are generally well protected behind a multi-member LLC, which can be as simple as getting a trusted friend or family member to agree to sign on for a small percentage of ownership.

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Posted · Report post

my company is an LLC, and my "ol lady" is the multi-member!

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Posted · Report post

Just to muddy the waters here...I have a sole proprietor LLC.
Insurance via "Society" in Fon du Lac,WI and have an extra rider for shows which covers my product to,from and at.
they also cover me when I teach in the shop provided I limit myself in some ways.

Insurance is NOT like photographs where it is better to ask forgiveness thanpermission. It is best to lay out all of what you wish to do and then do that. If you hide things they can drop you...after the occurrence of the claim. Do not give them any reason to.
Tell them what you wish to do and ask how that effects the policy..it is a service industry to some extent and they want you to give them money.

You should shop around, but it will be in a small range of costs....and it is cheap compared to a claim against you.

Demos are an odd thing...there is a reason THEY want YOU to have insurance.

Ric

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Posted · Report post

Here's an article on piercing the corporate veil. Good reading for any small business owner. http://www.nolo.com/legal-encyclopedia/personal-liability-piercing-corporate-veil-33006.html

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Posted · Report post

Thank you for posting that MattBower. That was very informative and helped clarify somethings for me.

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Posted · Report post

As a former insurance agent, and keep in mind this varies from state to state, I can tell you that your homeowners might cover "losses" but not being sued. Now, most HO policies have a set amount for liability, but this covers things like slip and falls, burnings from the stove, a limb falls out of one of your trees and crushes somebodies car, etc. In the event of a fire, and your insurance company REALLY needs to know you have a forge, what kind of fuel it uses and if it's vented/screened/all the details, if your shop burns down they will replace your shop and tools. This tends to fall under the section in your insurance contract dealing with unattached structures. Usually you get 10% of the value of the home, however that is very often increased at a very low increase in cost.

If you are blacksmithing as a business, you need to pursue commercial liability and property coverage. The property coverage covers...property. Simple as that. It will spell out what kind of losses it will cover you for, what amounts and in what way it will repay. Whether it will pay a depreciated value based on how long a tool is expected to be used, or if it will simply pay to replace the tools.

The Liability Coverage is what will protect you if you are sued. Make sure your insurer knows precisely what kind of things you make. What value, whether they are for large industrial, smaller home construction, ornamental, etc. Keep notes of all the items you make. In fact, a portfolio is not only good for displaying to an insurance agent, but also to customers. If you are going to be holding classes, or will have "trainees/students/paid peons" they need to know about that too.

Full disclosure to your insurance company is 100% ideal. Like a lawyer, they need to know. Because just as soon as you fail to mention that you make sharp, pointy knives and store them hanging from wires from the ceiling, one of them will fall, hurt somebody and they'll say "whoa whoa whoa whoa whoa...Yeah, no." There's a LOT of grey area an insurance company is willing to work in. It may cost a bit more in premiums, but they'll back you. They just need to know about it.

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Posted · Report post

Glad to see this tread started, it was a wake up call for me as I too I'm starting to do more demos away from home. Going to call my accountant, insurance agent and my lawyer next week. I'm already covered when I do a California Blacksmith Association sanctioned events, but I'm now doing Ren Faires and charity events.

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Posted · Report post

Just to muddy the waters here...I have a sole proprietor LLC.
Insurance via "Society" in Fon du Lac,WI and have an extra rider for shows which covers my product to,from and at.
they also cover me when I teach in the shop provided I limit myself in some ways.

Insurance is NOT like photographs where it is better to ask forgiveness thanpermission. It is best to lay out all of what you wish to do and then do that. If you hide things they can drop you...after the occurrence of the claim. Do not give them any reason to.
Tell them what you wish to do and ask how that effects the policy..it is a service industry to some extent and they want you to give them money.

You should shop around, but it will be in a small range of costs....and it is cheap compared to a claim against you.

Demos are an odd thing...there is a reason THEY want YOU to have insurance.

Ric

OK,

Switched insurance companies today.

I am with State Farm at 1/3 the previous rate and same coverage. They have an Art category now and I fall into it.

Covers among other things the building, tooling, tools on job sites and work to,from and at shows.

 

Ric

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Posted · Report post

This thread has been a good prompt, I am getting my DBA and just got off the phone with my State Farm agent, he has some great ideas for me, thanks to all!!

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Posted · Report post

Check what's allowed by your zoning too!  Kind of hard to claim your forge is a hobby if you have a business set up for it...

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Bump for thread. I am trying to find insurance right now. "The Heartford" turned me down. Said they would not insure anyone that builds anything from metal.

I have one offer for 1000$ a year Mesa underwriters specialty insurance

2,000,000 GL other than products/completed limit
2,000,000 products/completed operations aggregate limit
1,000,000 personal & advertising injury limit
1,000,000 each occurrence limit
100,000 damage to premises rented to you limit
5000 medical expenses limit
1000 deductible amount

Waiting to here back from State Farm now

I have to have 2,000,000 GL and 500,000 works comp and business auto liability 1,000,000 to secure a contract for a job that would most like become a repeat customer

Having a hard time finding anything. The ABANA insurance is a joke, they will not insure anyone that installs metalwork they built

Anyone find anything good lately? I would be bummed to turn down this job offer because I can't find insurance

Thank you. Mackenzie

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Posted · Report post

Try and go thru a broker vs an agent. Commercial brokers typically have several companies they work with and can find you the best policy vs an agent. My broker was able to cut my costs in half while more than doubling my coverage vs State  Farm whom I have my auto policies with. I've also typically found commercial brokers have a lot more knowledge about commercial policies vs typical small agents. I'm constantly having issues with the staff as SF about my commercial truck insurance because only one or two people there actually know and deal with commercial policies. That's not the case with my broker, where everyone in the office deals with commercial policies every day and I can get answers even if the person who typically handles my stuff is out of the office that day.

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Posted · Report post

My son in law was an agent for many years and his #1 advise was shop your insurance business every 4-5 years.  I dropped mine by almost 40% 2 years ago on my vehicles by doing it and ended up with who I started with.  My Property insurance is next in a few months.  Brokers are the way to go as well, let them beat up the companies for you, saves you a lot of time and stress. 

 

As far as getting into legal problems with liability, lawyers want to get paid, they will find every nickel you have regardless what you think you are protecting it with or where you have it hid.  Is it really worth giving demos if you stand a chance of losing everything you have worked for?   

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A side note, be sure to understand (talk to your agent) about what is covered and what is not.  If you are involved in  an accident outside of your coverage your insurance company will not cover you, if you are with in your coverage your insurance company will cover you at the minimum level (protect their assets).  Depending on the severity, you may also want you own lawyer but as stated above "the lawyers always get paid".  Insurance minimizes the damage in the event the the unintended happens.  Doing something out of your ability (such as under designing a platform to hold 100 people without proper engineering) may place you out of your coverage.

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