Custom Motorcycle and Fab Shop Insurance??

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Hey guys, I was hoping to get some advise from you small business owners out there, specifically anyone in New York...  I am looking to turn my hobby of building custom motorcycles and general metal fabrication into a small side business. I am currently a professional firefighter with 15 years until my retirement at age 45. The plan is to start the business small, and with a lot of luck have something decent to supplement my retirement. I've put together a good business plan, met with my accountant, and have been very successful as a hobbyist sipping bikes all over from LA to Australia. The only thing stopping me is outrageous insurance quotes. With average quotes in the $8,000/year range I would simply not be able to run the business. I thought the prices were due to the motorcycle end of the business, but I have been told by local agents that insurance in any metal fab business would be about the same. Does this sound right? There are hundreds of small custom bike shops throughout the country, and I can't figure how they would stay in business with those insurance costs...Some pics of my recent work:Current project: '78 XS650 Cafe '81 cb750K Street Tracker'72 cj360t Cafe
Reply:I know it sounds like a lot of money but one bike build will cover that cost. So even if you do like 15 bikes a year that's 14 to make money on. Believe me that not that high for insurance.www.georgesplasmacuttershop.comPlasma Cutter and Welder Sales and Repairs--Ebay storeTec.Mo. Dealer Consumables for the PT and IPT torch's
Reply:well if your shipping a product now without insurance you are liable, and with a civil service job you risk everything, if your not incorporated your personal property is up for grabs..NOW...you also risk your salary and pension being garnished from a lawsuit as you have no protection..its also criminal to run a business in at least nassau county without insurance....so weight that against the cost of doing it right..and remember everything is tax deductible once you are doing it right....thats the cost of business...but it sounds like you have a good product and should do well..so dont look at it as a cost ..but an investment so you can sleep good at night and know your covered...Of all the things I lost I miss my mind the most...I know just enough about everything to be dangerous......You cant cure stupid..only kill it...
Reply:Originally Posted by roadkillbobbwell if your shipping a product now without insurance you are liable, and with a civil service job you risk everything, if your not incorporated your personal property is up for grabs..NOW...you also risk your salary and pension being garnished from a lawsuit as you have no protection..its also criminal to run a business in at least nassau county without insurance....so weight that against the cost of doing it right..and remember everything is tax deductible once you are doing it right....thats the cost of business...but it sounds like you have a good product and should do well..so dont look at it as a cost ..but an investment so you can sleep good at night and know your covered...
Reply:Sorry..sometimes the truth hurts...but it could hurt more.....If you dont want to spend the big money for fabrication insurance, I  would get general liability insurance for welding or something that might have some of what you do in the coverage, at least you made an attempt and you will have some coverage, then you can always upgrade to what you fully need, in the least..incorporate..PRONTO.. it wont cover what you did before, but you have some separation from personal assets going forward...nothing happens till something happens....then all hell breaks loose and everyone runs for damage control...Of all the things I lost I miss my mind the most...I know just enough about everything to be dangerous......You cant cure stupid..only kill it...
Reply:Originally Posted by roadkillbobbSorry..sometimes the truth hurts...but it could hurt more.....If you dont want to spend the big money for fabrication insurance, I  would get general liability insurance for welding or something that might have some of what you do in the coverage, at least you made an attempt and you will have some coverage, then you can always upgrade to what you fully need, in the least..incorporate..PRONTO.. it wont cover what you did before, but you have some separation from personal assets going forward...nothing happens till something happens....then all hell breaks loose and everyone runs for damage control...
Reply:Looks like you're the type that's done your research and intend to do everything 'right' ( nice looking bikes BTW).  No brainer.  Pay the money for the business insurance. You won't be saving anything by not paying. Trust me.:
Reply:Thanks for the responses. Right now I take a lot of precautions to limit my liabilities, and have met with an attorney. I am very careful to stress that I am not a business, and I do not advertise at such. I also don't build bikes and immediately sell. They are all registered to me and ridden for a period of time before I sell them. I understand the liabilities and do all that I can to currently protect myself.   One of my reasons for wanting to start the business (s corp) is protection for myself and the customer. I would also benefit greatly from the deductions, and the ability to advertise.   Unfortunately, bike building is not as profitably in the beginning as most would think. Building motorcycles for profit is difficult to say the least. Those insurance costs are not insurmountable, but certainly a concern. I now know that it is at least normal. Thanks again.
Reply:Originally Posted by MinnesotaDaveIncorporate equivalent to LLC or better in some way?(or mean the same thing)
Reply:Originally Posted by MinnesotaDaveIncorporate equivalent to LLC or better in some way?(or mean the same thing)
Reply:in a nutshell, being incorporated gives you and your personal assets the best and most protection from many liabilities..Of all the things I lost I miss my mind the most...I know just enough about everything to be dangerous......You cant cure stupid..only kill it...
Reply:Originally Posted by ncologerojrCorporations or incorporating separates business assets from personal assets. If someone sues a corporation only the business assets are at stake, not the business owners personal assets. LLC's and S-Corps are two common types of corporations.
Reply:Originally Posted by roadkillbobbllc is not a corporation its a limited liability  company
Reply:Originally Posted by Lis2323Looks like you're the type that's done your research and intend to do everything 'right' ( nice looking bikes BTW).  No brainer.  Pay the money for the business insurance. You won't be saving anything by not paying. Trust me.
Reply:at this point just get any type of insurance that covers some of what you do...where is your home/shop located? try calling a few insurance brokers that can try and work with you on quotes..Of all the things I lost I miss my mind the most...I know just enough about everything to be dangerous......You cant cure stupid..only kill it...
Reply:Originally Posted by roadkillbobbat this point just get any type of insurance that covers some of what you do...where is your home/shop located?
Reply:Thanks for the rundown - I now know that I do not know everything that I should - and should do like the OP, talk to an attorney. End my hijack of thread 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:Originally Posted by ncologerojrUpstate NY, the hudson valley. Can I get insurance to cover my work if I am not yet any type of business?
Reply:Originally Posted by ncologerojrThank you. I have done my homework, and also have a business degree which helps a bit. This thread has kind of spiraled in the wrong direction...I was asking for opinions on the price quotes I'm receiving for insurance, not wether or not I need it. I obviously see the importance of being insured, which is why I went out for quotes. I'm trying to do things the right way, I was just trying to avoid overpaying for insurance...
Reply:Insurance................kinda takes the fun out of running your own business.
Reply:Buy the insurance so you're covered and in NY you sure as hell need it ! Nice Bikes Last edited by NinjaRay; 03-20-2015 at 08:11 PM.
Reply:They stay in business because they make unique stuff that people want.Your bikes don't look bad but and if I saw one on the street I might stop to look at it but no interest in buying one. Then you got to think nobody is going to pay you what you got into the thing.Its the wrong niche to me.
Reply:Insurance is a good idea. Make sure that your insurance package includes products liability. I used to build fittings for Harley sidecars and got to thinking about products liability. For the amount of money I was taking in, it wasn't feasible to continue with the cost of insurance that I was quoted. The OP's situation is not unusual. Very often, the need for insurance and its cost is the deciding factor as to whether a business venture is workable.Miller Millermatic 252Miller Syncrowave 200Liincoln AC-DC 225Victor O-A Set
Reply:I know you don't want to hear this, but any attorney is going to get you on the stand and testify that you modified and sold bikes internationally, for a profit, and after the jurors see a picture of your shop, even the biggest dimwit is going to figure out that maybe you're not full time, maybe you don't advertise, maybe you don't have a store front, but you are acting as a professional. Insurance is what you buy when you really don't need it, but when you really do need it it's too late to buy it! Perhaps you need to decide if it's time to dump the day job and go full time? Welcome to the dilemma that all of us who made the leap had to face, and believe me no one likes to pay for insurance until they have to make that call to claims. Good luck on your choice, and if you haven't tried one I would try an independent agent.
Reply:o.t it looks like the tubes from the lower frame rails to the upper tube [backbone] are butt welded should be slugged or one piece its a highly stressed area of a frame, there is some good info out there by a good no great drag frame builder who is now dead [Puppet] that works into street bikes also, anyway nice looking rodsIndeed, your venture is completely flawed and you should just ship all your bikes to my shop 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:Contrary to what some people think, an owner of an incorporated business can be held personally liable IF they prove there was gross negligence on the part of the owner. Just the same way off road motorcycles without an implied warranty still have to meet reasonable reliability requirements. You can't just incorporate to save your azz when you put out sub-standard products that can cause injury or are junk. Look at the multi million dollar auto recalls. Also being incorporated is all the same despite what it says on the business name whether it's INC., LTD, LLC, Corp., etc.Last edited by Welder Dave; 03-21-2015 at 12:30 AM.
Reply:Man you guys are tough on a hobbyist that doesn't plan on going full time for another 15 years until after he retires.  He currently builds bikes for himself and when its time to move on to the next one he sells it.  Does not sound any different than any guy I know.   He is just doing the mental groundwork to set up a shop after retirement to supplement his income with something he enjoys.Miller 211 MIGThermal ARC 186 TIGHypertherm Powermax 30 Plasma
Reply:The problem is, he isn't selling a stock bike or a bike with just aftermarket parts bolted on. He is actually building structural parts of the bike, so liability is involved. It also can't be considered a hobby if he is known to have sold several of his custom bikes.
Reply:Originally Posted by Toggle SwitchMan you guys are tough on a hobbyist that doesn't plan on going full time for another 15 years until after he retires.  He currently builds bikes for himself and when its time to move on to the next one he sells it.  Does not sound any different than any guy I know.   He is just doing the mental groundwork to set up a shop after retirement to supplement his income with something he enjoys.
Reply:Thank you for all of the responses. Again, I am not questioning the importance of insurance. I was just trying to find if my quotes were comparable to what others are paying for a similar business type. As stated in my original post, I have met with insurance agents. I have also met with my accountant to discuss the benefits of incorporating, both liability wise and financially. I appreciate all of the responses pertaining to my liabilities, but things have gone a bit off topic...
Reply:Originally Posted by pat ho.t it looks like the tubes from the lower frame rails to the upper tube [backbone] are butt welded should be slugged or one piece its a highly stressed area of a frame, there is some good info out there by a good no great drag frame builder who is now dead [Puppet] that works into street bikes also, anyway nice looking rods
Reply:The real need for Insurance would be for covering all of his "Stuff". Sure, product liability is a concern but highly unlikely that he would be sued if some customer goes rubber side up.More likely to get sued iffin' he is in an accident driving his automobile while on the way to pick up metal,tools, etc for his "business".  A fire in the shop takes out his geerage and all his $$ tools or a scumbag breaks in and steals all the equipment. His Homeowner's insurance is more likely to deny the claim if they find out this hobby is actually more of a business.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:Dragging this back up as it popped up in my google searches for small business Insurance. As I just incorporated (LLC) a small business in Austin TX, I'd like to hear how the OP ended up? I just got off the phone with what seemed like 100 different companies, none of the big companies have standard packages for my business model as 99% of my work is restoration of classic muscle cars and the last 1% is general metal fabrication (everything from baby gates to jeep tube bumpers). Everyone is saying I will have to go to the 'surplus' market for an insurer, but the ball park figures I was getting were palatable for the peace of mind. Long story short... How'd it end up going for you OP?- mattPrecision TIG 225MillerMatic 250Powermax 35XPPowermax 65TM 4X4 w/ water tableLagun FTV1Monarch 10EEJD2 M3 with hydro conversion
Reply:Originally Posted by roadkillbobbllc is not a corporation its a limited liability  company
Reply:I would recommend just getting the insurance. My insurance has been roughly 5% of my estimated business income for the year and they slightly adjust at the end of the year if needed. Part of the reason why it's so expensive is because I'm relatively small and also because my policy covers me for any instance that I could ever imagine happening. This includes parts failing, people getting hurt in my shop, etc. I also have and E&O policy that covers any advice I give in welding and/or production environments, which is crazy expensive, but the cost are offset by a rather large hourly rate. In the end, insurance will help your business. Every August I know my policies are due for the year and just save throughout the year in a separate account and pay them all at once.
Reply:What companies are you guys using? I'm working out of my attached garage right now. Seems that's a hot button for some of the places I have requested quotes for, something about the home insurance and business insurance not mixing well.Was fortunate enough to have a detached shop in CA, but now in TX I don't have enough customer base to warrant renting out a shop space. I'd like to be able to use my attached garage until I outgrow it and have the base to support my move into a separated shop.Precision TIG 225MillerMatic 250Powermax 35XPPowermax 65TM 4X4 w/ water tableLagun FTV1Monarch 10EEJD2 M3 with hydro conversion
Reply:Originally Posted by 1967martiWhat companies are you guys using? I'm working out of my attached garage right now. Seems that's a hot button for some of the places I have requested quotes for, something about the home insurance and business insurance not mixing well.Was fortunate enough to have a detached shop in CA, but now in TX I don't have enough customer base to warrant renting out a shop space. I'd like to be able to use my attached garage until I outgrow it and have the base to support my move into a separated shop.
Reply:Nice lathe in the background...looks just like the Southbend lathe that I have!