Insurance for Home Hobby Shop

[StoneLaneForge]

Hello all,
I've seen several posts about business liability insurance and the like, but I'm wondering if anyone has suggestions on insurance in the US for a home hobby set up.  With risk of fire and the like, I'm wondering if there's an extra policy I'd need for the extra risk.

[rockstar.esq]

Stone,

You might ask your home insurance provider to quote it for you.  Be advised that insurance is a tricky subject.  I have a carpenter neighbor who had an insurance policy to cover all his tools which where in a trailer, parked on his property.  One day he parked the trailer on the street right in front of his home.  Some thief broke in and stole several tools.  

The insurance company denied the claim because the trailer wasn't parked in the driveway.  The kicker was, that the insurance would have covered him if he'd parked the trailer any place between his driveway and his job sites.  According to the agent, the only place he wasn't covered was the street in front of his home.  That nasty little loophole wasn't mentioned when he priced the policy.

Another thing that comes to mind is to be very, very, careful about having only listed equipment in your home shop.  Most insurance policies have a provision which requires that only listed equipment be on the premises.  Stuff like electrical forge blowers are almost always in violation.  Hiring an electrician to hook it up won't make any difference.  The problem in that case isn't the quality of the work, the problem is that there's no listing agency approval for the completed assembly.

I've heard of insurance claims for stuff like flooding being denied for having an unlisted chandelier installed in the home.  There are a lot of super-cheap import electrical tool makers who are not listed.  Be sure you check.

[Kozzy]

I would add to Rockstar's post the notion of selling anything out of the home smithy.  Magically it becomes a business rather than personal equipment and claims can be denied should they choose to.  There are LOTS of games insurance companies play when they want to get out of paying.  

In the past, they sometimes also played the self-insured game for those who under-insured.  Say your stuff is worth $ 100K.  You insure it for $ 50K because you underestimated it's replacement value.  If it's all lost, insurance companies (*some* used to) only pay out $ 25K:  They claimed that you were 50% "self-insured" therefore they are only responsible for 50% of the loss.

Cross all the T's and dot all the I's.

[George N. M.]

Another few points:  Make sure everything is in writing.  The insurance broker is just that, someone connecting up the insurance company and the insured.  Anything he or she says is not binding on the insurance company.  The only thing that counts is what is written in the policy.  Read it carefully before signing and it will be heavy going in very fine print.  Don't be shy about taking enough time to read and understand it.  I have copied policies at 150 to 200 percent just to save my eyes and be better able to keep from skipping lines or rereading the same line several times over.  Take notes and ask questions.  If you don't understand something consider investing in a couple hours of an attorney's time to get clarification.  Beware of "terms of art" which mean something very specific in the insurance industry and something else to the lay person. 

Also, beware of "new replacement value" and "fair market value."  The first is what it costs to replace X while the second is what a used X, which is what you owned, is worth.  The second is much less than the first. 

If you can't get satisfaction out of an insurance company on a claim, a) consult an attorney and b) file a complaint with your state insurance commissioner.  Also, tell the insurance company that they are "acting in bad faith" with you.  Those are "magic words" which will often get their attention.

"By hammer and hand all arts do stand."  

[Kozzy]

37 minutes ago, George N. M. said:

Also, beware of "new replacement value" and "fair market value."  The first is what it costs to replace X while the second is what a used X, which is what you owned, is worth.  The second is much less than the first. 

My Brother did have a house fire which destroyed virtually all the contents.  He now swears by full replacement value insurance...as well as keeping as much of your old crap as possible (that's a joke on his part).  In his case, things like an old quilt he used for the dogs was considered a custom craft project at high replacement value--similar for an old piano he was given for free.  In reality most items really DO need to be replaced with new equivalents so you aren't actually coming out ahead:  But dang, he did come out like a bandit on some of his old "junky" stuff.

"New replacement value" is well worth it.

[Glenn]

For the shop, take each machine, anvil, item, etc and put a strip of 2 inch masking tape on the item. Write the item name, model number, serial number on the tape.  When you photograph each item the information is in the photo.

Put the collection of photos in a safe place, usually off premises.  A copy can be included in the insurance papers, as to what is insured.  This will become very valuable incase of a insurance claim, or theft.  

[ThomasPowers]

Back in the early 1990's, a student of mine had the bad habit of leaving his blacksmithing stuff outside his rental house which was near the university.  He was using my loaner anvil; but when I stopped by one day and it was outside and he wasn't home.  I loaded it up in my vehicle and took it home.  He replaced it with a couple of ASO "farm anvils" he found and a short time later all were stolen.   Well he had Renter's Insurance with replacement;  His agent said "ANVILS, where the heck am I supposed to find  ANVILS?"  So he handed him a copy of the Centaur Forge Catalog and the cast iron ASO's were replaced with peddinghaus ones.  To rub it in I had to write a statement that he had owned the anvils and that they had been stolen.   So every time I visited him after that I would hide his anvil in the slacktub or coal storage, or....  He is now a professional smith and blames me for that---I'm sure to not accept food gifts from his wife....