At What Point Liability Insurance

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Okay.We have all, at some point, repaired or built something for a friend. Sometimes, even got paid something for it.I have built a few bbq pits for friends, for the cost of materials, and if I can settle on 1 or 2 designs, and streamline my process, I would like to build and sell a few in my retirement years.At What point do we need to get insurance?A guy could drop the door on his kid's fingers, could have a wreck rolling it over rough or wet ground, or burn down a national forest, while cooking out.What can I be held liable for?Is Product liability sufficient?How much is enough?How much would one expect to pay?Thanks.Hobart Beta-Mig 2511972 Miller AEAD-200LEMiller 250 TwinNorthern Ind. Hybrid 200Longevity Stick 140Longevity Migweld 200SThermal Arc Pak 3XR
Reply:You should be covered by a liability exposure policy if you even think of doing something for someone else. If you even touch something, (compensated, or not) you still have placed yourself at risk to some people. Policy's are not that expensive but a necessary cost of business these days. There is always someone to do the job cheaper whom thinks the risk is not worth the cost of covering their bases and I say "let them have at it". CYA cause ain't nobody else gonna do it for you.SlobPurveyor of intimate unparalleled knowledge of nothing about everything.Oh yeah, also an unabashed internet "Troll" too.....
Reply:Slob got it right. You can shop around for an economical general liability policy and in my case includes some product liability in the amount of $250,000 to $500,000. You can then add specific items for additional product liability insurance. At one time I was making a plumbing tool and the additional product liability insurance was $400 per year for $1 million of coverage. That was in the mid 90's. This insurance was required by Home Depot. I think for a small shop, 1 or 2 people general liability policy would runs some $1000 per year, and with the additional product liability another $400. That would be $1400 per year and in my case I have to do 4 times the cost to break even. That would mean I would have to sell $5600 of product before any money is made. Things may have change since I was involved with product liability. There may be insurers willing to insure the product only.Weld like a "WELDOR", not a wel-"DERR" MillerDynasty700DX,Dynasty350DX4ea,Dynasty200DX,Li  ncolnSW200-2ea.,MillerMatic350P,MillerMatic200w/spoolgun,MKCobraMig260,Lincoln SP-170T,PlasmaCam/Hypertherm1250,HFProTig2ea,MigMax1ea.
Reply:Geezer, The person to ask this question to is your insurance agent!  Just my experience.  Best regards Bob
Reply:Insurance is a risk mitigation strategy. Your insurance man is motivated by commissions to sell you more insurance, perhaps even more than you really need. Risk management is a science all to itself, and honestly having insurance will not cover you from all claims. What if a claim exceeds your coverage? I think insurance is prudent for some if not most folks. But it may be worthwhile to speak with your lawyer about creating a standard boilerplate contract that you can use on every sale that disclaims certain liabilities. The other thing to consider is the form of your business. If you create a corporation or LLC, any lawsuit would go against the assets of the company, not your personal assets, unless you were grossly negligent (I am not a lawyer, so check this fact in case I misquoted it). That may be much more valuable in protecting you than just getting insurance.Miller Multimatic 255
Reply:Like everyone stated, inquire about a million dollar umbrella policy. It doesn't cost that much and covers a lot !
Reply:Good point.I guess that's why, when we buy any product, we receive an owner's manual with all of the warnings."Do not look at the arc without proper protection""Do not touch the burner when hot""Do not insert your ***** into the muffler when engine is running. It could negatively effect your love life."OK, I made the last one up.Hobart Beta-Mig 2511972 Miller AEAD-200LEMiller 250 TwinNorthern Ind. Hybrid 200Longevity Stick 140Longevity Migweld 200SThermal Arc Pak 3XR
Reply:Few years ago my wife got so mad at me she could have spit nails. All because I wouldn't help her nephew get brownie points with the little gyppo contractor he works for. They had a contract to build a small commercial building with exposed timber construction. He wanted me to build all the saddle brackets to hold the timbers. I wouldn't touch it! My wife reminded me about 35-years ago I built a bunch of timber saddle brackets for a family friend. I couldn't get it through her head this family friend is a PE who works in the local Navy shipyard. These brackets were for his house he was building. He designed the brackets, and handed me the blue prints. I could just see if a bracket failed that I built for this gyppo contractor who would get the short end of the stick.Don’t pay any attention to meI’m just a hobbyist!CarlDynasty 300V350-Pro w/pulseSG Spool gun1937 IdealArc-300PowerArc 200ST3 SA-200sVantage 400
Reply:I have to second what Louie said above. Seriously looking into product disclaimer paperwork could save you a lot on insurance that may do you little good in the event of a problem. In my business as a welding contractor for the gas and oil drilling industry I am required to have a ridiculous amount of insurance as well as a membership with a safety organization with a ton of paperwork. Long story short I spend about $30,000 a year just to have enough liability insurance and safety rating to be allowed on a drilling site. It is my largest expense in business.So what happens if I cause a fire or explosion that destroys an entire drilling rig, or if I am simply blamed for an accident that causes my insurance to simply payout for minor damage? As of now I am glad I don't know what would happen.What I am GUESSING that would happen is this, my insurance would either cancel me altogether or raise my premiums to the point that it would not be profitable to operate this business. I also think that if my 9 million dollar liability policy were ever canceled due to an accident then my name would go on a list with all the companies that offer this type of insurance and I would likely never be able to obtain insurance again. I have been doing this type of work for 14 years but I think if I am ever found to be the result of an accident I am done. I may be wrong, I hope I never find out. All I know for sure is that I gotta pay the insurance or I cannot work as contractor for these companies.The worst thing I can think of happening is if everything I ever welded instantly became UNWELDED
Reply:It is starting to sound like building affordable, quality pits targeted for working folks who can't afford a high dollar pit is might near impossible.Where there's a will, there's a way, right?Hobart Beta-Mig 2511972 Miller AEAD-200LEMiller 250 TwinNorthern Ind. Hybrid 200Longevity Stick 140Longevity Migweld 200SThermal Arc Pak 3XR
Reply:Not impossible, its just about how much risk you are willing to take. Incorporate your business to protect your personal assets, draft a reasonable contract (a lawyer shouldn't cost you more than say $500-$1500 to do this) and get a reasonable insurance policy. You have to seriously think about what the top 5-10 risks are that could bite you and how you protect against those. in the end you will have to make a decision to live with some level of residual risk that you find acceptable. if you de-risk everything completely, you will be in the poor house. My point is you can't solve your problem with just insurance. As time progresses you may need to repeat the process and adjust accordingly.Miller Multimatic 255
Reply:You can do it and be affordable, within reason. Insurance is not a huge expense for most work.Sometimes you are covered under your homeowners policy for hobby level work. I knew a guy who was licensed to manufacture ammo out of his garage and was covered by a simple rider on his homeowners policy. He grew way beyond that in a few years, but in the beginning it cost him less than a hundred a year.You will have to shop around. I did a project one time that wanted 10mil coverage. I called my insurance agent and the quote was so high I couldn't make enough money on the job. I knew generally what others were going to bid so I started shopping around. I found another insurance company that would sell me exactly the policy I needed for one tenth what my agent quoted me.Insurance is something you need to shop around every few years at least. You are not always looking for cheapest, sometimes you find more coverage for the same money, sometimes you are just looking for better service.Mr. HE
Reply:Good advice all.I have a call in to my homeowner's agent.Hobart Beta-Mig 2511972 Miller AEAD-200LEMiller 250 TwinNorthern Ind. Hybrid 200Longevity Stick 140Longevity Migweld 200SThermal Arc Pak 3XR
Reply:I can't speak for everyone, but my own experiences with insurance are as follows:1 - Welding is one of the most expensive crafts to insure; I think that roofing and landscaping/tree cutting are the only business activities that are more expensive than structural welding.2 - Mobile or on-site welding is dramatically more expensive than working out of your own fabrication shop.  As it was explained to me, working at someone else's location puts you out of control of the environment.  I can agree with this as I've seen others on a job site do foolish things a welder would never do.  (like setting a gas can underneath the scaffolding I was standing on while welding some bracing in place.)3 - What you do also dramatically affects the cost.  Manufacturing yard art = cheap.  Welding on prototype rocket motors = expensive.  Your agent can help you navigate the minefields of what's expensive from an insurance perspective and what's not.  Like a previous poster mentioned, I've passed on work that I couldn't do for lack of insurance; where the coverage was too costly compared to the cost of the work.  Spools for a local power plant's fuel pump come to mind.  Also welding on a Ferris wheel for a traveling carnival, as another example.  If you want to touch anything that rolls on the road, involves structural steel, could injure someone if it fails, or cause expensive property damage if it fails, prepare to pay massive premiums for insurance.  My experience is reasonable insurance coverage on a mobile welding business doing the risky things I mentioned above runs $3000 to $5000 per year in Ohio.  Oilfield work or heavy structural steel requiring large umbrella liability policies goes north from there.4 - Premiums vary based on Geography.  Working in the big cities is expensive.  Working in farm country is less so.5 - Insurance is just one of the reasons the experts say you need 6-12 months of operating income built up in order to start a small business.  Your insurance premiums are typically based on a % of your gross revenue.  And the insurance companies expect your business to grow each year; so expect your premiums to climb annually as well.6 - Your homeowners insurance policy does not cover any property associated with a business.  So if your detached garage/workshop is burglarized or burns down in an accidental fire, don't expect your insurance to pay anything on items like welders or machining equipment.  And be prepared to fight over coverage for everything else.  Inland marine coverage is necessary to protect your business property.  But typically you have to buy business insurance as a bundle.  I've never found an agent that would write just liability coverage or just inland marine coverage; it's all or nothing.7 - Lying about the work you do will only result in your paying premiums and then not getting coverage when you need it most.  So be honest and forthright in your dealings; and pay the piper.Last edited by A_DAB_will_do; 01-12-2015 at 01:25 PM.Benson's Mobile Welding - Dayton, OH metro area - AWS Certified Welding Inspector
Reply:...my business model, you ask??I met an old retired black gentleman one weekend, who was sitting with a trailer that contained five of this type of mailbox.He had spent his life doing stucco work on the buildings in downtown Houston, and decided he would use that in his retirement years for vacation money.They look like stone, or brick, or whatever he decides, but they are actually stucco.He says the materials to build one cost around 100.00, and he sells them for around 300.He builds one a day, and they are usually gone before the weekend is.A little talent, mixed with ingenuity and work ethic...Hobart Beta-Mig 2511972 Miller AEAD-200LEMiller 250 TwinNorthern Ind. Hybrid 200Longevity Stick 140Longevity Migweld 200SThermal Arc Pak 3XR
Reply:I've had to have insurance off-and-on (mostly off) and it was never super cheap - about $1,000 per year was the normal for a little guy like me.Dave J.Beware of false knowledge; it is more dangerous than ignorance. ~George Bernard Shaw~ Syncro 350Invertec v250-sThermal Arc 161 and 300MM210DialarcTried being normal once, didn't take....I think it was a Tuesday.
Reply:It doesn't seem like much, if you break it down per pit.Of course, it is easy to figure out how many I can build per month.I think forecasting how many I can sell will be trickier.Hobart Beta-Mig 2511972 Miller AEAD-200LEMiller 250 TwinNorthern Ind. Hybrid 200Longevity Stick 140Longevity Migweld 200SThermal Arc Pak 3XR
Reply:Can you post a picture? For the life of me I can't imagine what kind of liability you would be facing. I mean the thing has to have virtually no moving parts, right? You could always label it "not for use with actual fire" and "Fire is hot, use at your own risk"....kind of like the label on a cup of coffee we now see, as a result of the stupid idiot who didn't know that coffee is hot and hot coffee can burn.Miller Multimatic 255
Reply:I really would talk with a lawyer before investing in insurance. At least get incorporated first.Miller Multimatic 255
Reply:some useful links I found  http://www.investopedia.com/articles...y-lawsuits.asphttp://smallbusiness.foxbusiness.com...from-lawsuits/Miller Multimatic 255
Reply:On a bit of a side note concerning the "racket" of insurance---When speaking of insuring your "stuff", be sure you have enough insurance to actually cover any loss--there is a game the shysters in the insurance industry play that can bite you.  It works like this:  Assume you have $ 100K in stuff but only carry $ 50K worth of insurance. When you suffer a loss..say for example some tweaker steals $ 5K work of your stuff to fill their nose...the insurance will only cover half (not including deductible).  They claim that you "self insured" $ 50K and paid for $ 50K therefore they only have to pay half and you pay the other half since there is no way to determine which half they insured and which half you did.  No such thing as going light on insurance to save a buck.This has bit some people who never get around to re-evaluating their household insurance to keep up with the times.  House burns down, you think you are covered, Insurances claims you were "self insured" for some large portion of the loss and only pays their portion.  Since many household policies are "replacement value", the amount they claim you should have been insured for can be far higher than you might think.
Reply:Originally Posted by Louie1961Can you post a picture? For the life of me I can't imagine what kind of liability you would be facing. I mean the thing has to have virtually no moving parts, right? You could always label it "not for use with actual fire" and "Fire is hot, use at your own risk"....kind of like the label on a cup of coffee we now see, as a result of the stupid idiot who didn't know that coffee is hot and hot coffee can burn.
Reply:I built a grill for a lady lasts year. I had one I had made from a 55 gallon drum that I offered to give her, but she wanted one more heavy duty.I had a 32" piece of 16" pipe that was 3/8 thick. That is what she wanted.From the day I delivered it to her, I tried to talk her into letting me replace it with one built from 1/8 material, after seeing her try to move hers around the porch.I just had an image of her letting a wheel drop off into the marshy grass, and it falling over on her or her daughter.I lost sleep over that 'till she told me she traded it off.Hobart Beta-Mig 2511972 Miller AEAD-200LEMiller 250 TwinNorthern Ind. Hybrid 200Longevity Stick 140Longevity Migweld 200SThermal Arc Pak 3XR
Reply:Falling TVs send a child to the ER every 30 minutes.. you don't see a lawsuit about it. Ed Conleyhttp://www.screamingbroccoli.com/MM252MM211 (Sold)Passport Plus & Spool gunLincoln SP135 Plus- (Gone to a good home)Klutch 120v Plasma cutterSO 2020 benderBeer in the fridge
Reply:Originally Posted by geezerbillI built a grill for a lady lasts year. I had one I had made from a 55 gallon drum that I offered to give her, but she wanted one more heavy duty.I had a 32" piece of 16" pipe that was 3/8 thick. That is what she wanted.From the day I delivered it to her, I tried to talk her into letting me replace it with one built from 1/8 material, after seeing her try to move hers around the porch.I just had an image of her letting a wheel drop off into the marshy grass, and it falling over on her or her daughter.I lost sleep over that 'till she told me she traded it off.Yes sir.I think more now about potential issues, who the customer is, and what I can do to mitigate the risks.Hobart Beta-Mig 2511972 Miller AEAD-200LEMiller 250 TwinNorthern Ind. Hybrid 200Longevity Stick 140Longevity Migweld 200SThermal Arc Pak 3XR
Reply:Exactly Bill, I like living in my house too much to lose it Dave J.Beware of false knowledge; it is more dangerous than ignorance. ~George Bernard Shaw~ Syncro 350Invertec v250-sThermal Arc 161 and 300MM210DialarcTried being normal once, didn't take....I think it was a Tuesday.
Reply:Take a good look at any policy you buy. Some have huge deductibles.  Just selling a few out of my garage, I'm not sure I would even mess with it, at least at first.Put a big IMPORTANT SAFETY INFORMATION!!!  READ THIS FIRST!!  sheet inside the smoker---- laminated and connected with a cable tie - listing some basic safety warnings.  Do not allow children near the smoker.  Do not use it on unstable or moving surfaces.  Never leave smoker unattended while coals are hot.  Wear protective clothing on your hands and face.  Smoker body may be HOT and can cause severe burns.  Don't use under the influence of alcohol.  Never ignite wood or charcoal with gasoline or other petroleum derivatives; use only standard charcoal lighter fluid, as per directions on the container.  Do not use near flammable surfaces such as dry grass.   .... and you are NOT responsible for any injury to person or property occurring as a result of not following these precautions.....    and so on............And of course, build it well. Splay the legs out so it's hard to knock over, etc.-RuarkLincoln 3200HDHobart Stickmate LX235TWECO Fabricator 211i
Reply:That certainly seems to be the common sense approach.My homeowner's agent doesn't carry any type of product liability rider or policy.More research ahead...Hobart Beta-Mig 2511972 Miller AEAD-200LEMiller 250 TwinNorthern Ind. Hybrid 200Longevity Stick 140Longevity Migweld 200SThermal Arc Pak 3XR
Reply:Find a bussiness insurance agent the does general liability. Ask for a stand alone product liability policy. They are gonna want to inspect the item inside and out. You may also want to operate out of a post office box and website.Weld like a "WELDOR", not a wel-"DERR" MillerDynasty700DX,Dynasty350DX4ea,Dynasty200DX,Li  ncolnSW200-2ea.,MillerMatic350P,MillerMatic200w/spoolgun,MKCobraMig260,Lincoln SP-170T,PlasmaCam/Hypertherm1250,HFProTig2ea,MigMax1ea.
Reply:I just went the rounds with my Insurance agent. $3000 a year for onsite liability. It would have been more had I not been certified. The work I was quoting on the coverage was from a PE who handed me the designs and had an CWI check the work. I'm still in negotiations with both the agent and the PE. :/Regards,RobGreat Basin WeldingInstagramBlue weldersRed weldersMy luscious Table DIY TIG Torch cooler