Insurance

[Heathwarren]

I have a mostly hobby shop in my basement but do sell some things I make to friends or on Etsy. I only have homeowners insurance but considering getting small business insurance for my equipment. It’s probably less than $15,000-$20,000 replacement cost. Does anyone have words of wisdom or suggestions. Or should I take my chances that nothing bad will happen?

 

[Packard]

Ask your agent about an “Umbrella policy”.  It is a supplemental liability coverage that takes over once your regular policy runs out.  It tacks on to both your home owners and your automobile coverage.

I have $500,000.00 liability coverage on both my house and my cars.  I have an umbrella policy that adds one million dollars to those coverages. 

It is a bargain because they assume that the primary coverage will handle almost all the payouts.

And while you are at it, confirm that your automobile coverage includes deer damage.  Insurance companies have been quietly dropping deer damage from the comprehensive policies.  The last I checked, it was a line item that cost me $6.00 per 6 months.  Deer damage is the single leading cause of insurance payouts.

 

[Rutabagared]

I have a mostly hobby shop in my basement but do sell some things I make to friends or on Etsy. I only have homeowners insurance but considering getting small business insurance for my equipment. It’s probably less than $15,000-$20,000 replacement cost. Does anyone have words of wisdom or suggestions. Or should I take my chances that nothing bad will happen?

My equipment is covered under my homeowner's policy.

 

[Packard]

Equipment is not the real issue.  The O.P. says that he makes some items for sale.  If one of those items causes a serious injury, the liability is the issue.

And if that injury is to a child, then the liability could easily reach over a million dollars.

 

[jeh]

And while you are at it, confirm that your automobile coverage includes deer damage.  Insurance companies have been quietly dropping deer damage from the comprehensive policies.  The last I checked, it was a line item that cost me $6.00 per 6 months.  Deer damage is the single leading cause of insurance payouts.

That is an excellent point. If you see deer anywhere you drive regularly then you need that.  If anything that should be a delete item and not an add.

 

[Packard]

Years ago, while I was covered by Travelers’ Insurance, I asked about deer coverage.  Travelers’ had dropped it from the comprehensive package and it was $8.00 per year as a line item. 

I asked my agent why they had not made a point to let me know that Travelers had dropped that coverage, she replied, “If I had made a point to let my clients know about the dropped coverage, Travelers’ would have dropped us as their agents.”

What the insurance companies’ hopes are that when you hit a deer that you are not covered.  Then they can say, “We would gladly pay for the damages if you had checked that box and asked for it.”

In that way Travelers’ would get one free ride for deer damage.  It is a tactic that many other insurance companies are taking.  The coverage is very cheap and they get to blame the client for not having requested it.

In any case, a phone call resolves the issue, but I would strongly suggest that you confirm that coverage each time you renew.  The insurance companies have already proved that they are not to be trusted in that regard.

 

[peter halle]

If you are in a business and using your items at home you may not have coverage for tools under a homeowners policy.  Additionally as already posted above you should be carrying liability insurance - for your own sake.  I could write a whole tome on insurance but when it comes to tools you can either insure your tools for full replacement cost (minus a deductible) or on a depreciated basis.  Each will come with its own set of needs. 

Based on advice I received here eons ago I switched my policy to Cincinnati Financial.  In discussions with them I tailored my tool insurance so that my high dollar tools - mainly Festools were at replacement cots but then my hand tools and other tools more readily purchased with limited funds available in case someone wiped me out wouldn't cost as much to insure.

Talk to an agent in detail about what you are doing.  Making items, performing repair services, installing what you make most people forget that one and if that bookshelf that you installed falls over on little Johnny because he was climbing on it might have different needs - construction defects, and then installation issues), etc.

Try and find a Cincinnati agent and talk.  Traveller's is another popular company.  My policy, which is way more than you will need is

If I can be of further assistance, let me know.

Peter

 

[Crazyraceguy]

I had this discussion with my agent about a year ago. I have no intention of building things for sale, so the business aspect doesn't apply, but I have way more invested in my tools than any standard homeowner's policy would cover. All it takes is a rider to include them. I just need to catalog them with proper descriptions, serial numbers (for things that have them) and pics would be appreciated.
They are well covered, while they are still at work, but the retirement talk has sparked this.
Won't be long now.

 

[Packard]

If I were to document the tools that I own, I would whip out my cell phone and take pictures:

1.  An overview of the machine in the home.  The GEO Tags will be proof of the location of the machine.

2.  A close up of the model and serial number if available.

3. Label the photograph

Separately I would create a database showing all the tools, their replacement cost (new).

Typically insurance companies like to pay out “like for like”.  That is, if the machine is 5 years old, they want to payout based on what the value is for a 5 year old machine.

You will have to ask your agent how to value your machines for insurance purposes. 

Store the images both in your home and in a separate location (or on the cloud).

The other issue is, very often the accessories add up to more than the machine cost.

I’m pretty sure that the router bits that I own are more valuable than the router. 

One photo, with your router bits on a sheet of paper can document about 15 bits easily.

Write a description of the bits on the paper and place the bits in the matching positions. 

Insurance companies, in my experience are weasels trying to pay as little as possible.  Photo-documentation backs them into the corner about what you own.

 

[Crazyraceguy]

Yeah, router bits can add up extremely quickly. Insert bits, solid carbide spirals, etc are high on the list.

 

[Packard]

I have a fair amount invested in clamps.  I never counted, but I’m sure it is over $1,000.00.  Certainly more than I paid for my table saw, chop saw and router combined.

And yet it would seem petty to insure clamps.

 

[Crazyraceguy]

I have a fair amount invested in clamps.  I never counted, but I’m sure it is over $1,000.00.  Certainly more than I paid for my table saw, chop saw and router combined.

And yet it would seem petty to insure clamps.

Clamps are not likely to be theft items, but in the event that fire, water, etc can damage everything, you might as well include them in the group, covered by the rider. Heck, I wouldn't "itemize" individual router bits either, but the totality of them is easily 2k.