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OT Question..What kind of insurance is needed while running a hotrod shop and fabrica

Discussion in 'The Hokey Ass Message Board' started by Littleman, May 25, 2008.

  1. Littleman
    Joined: Aug 25, 2004
    Posts: 2,619

    Littleman
    Alliance Member
    from OHIO, USA

    What kind of insurance is needed to start a shop period, like for welding up frames and such..liability?.It just sounds very exspensive.......I know people that build frames for drag cars and he has nothing at all.......I am finding it hard to find good real info on this...What are some of the Hamber shop owners doing?....I just been thinking about this...Thanks, Littleman
     
  2. hotrodladycrusr
    Joined: Sep 20, 2002
    Posts: 20,764

    hotrodladycrusr
    Member

  3. Littleman
    Joined: Aug 25, 2004
    Posts: 2,619

    Littleman
    Alliance Member
    from OHIO, USA

    I will look into that..Thanks.....But their has to be someone out their with a shop that has to deal with this.........and know all the options...Thanks again I would have never had thought about calling Grundy, Littleman
     
  4. Bear Metal Kustoms
    Joined: Jul 31, 2004
    Posts: 1,857

    Bear Metal Kustoms
    Alliance Vendor

    You don't need anything if you want to lose everything.... I have liability insurance on the cars in the shop, insurance to cover us test driving etc and product liability insurance... Overhead sucks....I have 4 full time employees with workmans comp, we are registered with the BAR, etc... Lot's of hoops to jump through to do it all legal like.. Jason.
     

  5. Littleman
    Joined: Aug 25, 2004
    Posts: 2,619

    Littleman
    Alliance Member
    from OHIO, USA

    Do custom built and welded frames fall under the product liability insurance?...Thanks for the info, Littleman
     
  6. Bear Metal Kustoms
    Joined: Jul 31, 2004
    Posts: 1,857

    Bear Metal Kustoms
    Alliance Vendor

    YES... as do fab'd suspension parts, etc.. parts installed, IE. bought steering components, wheels, brakes, etc..do not..just need liabilty insurance because you put it together.. If the parts fail they can go after manufacturer.. If it is installation failure they will come after you.. I know it sounds like doom and gloom..but it is OK.. feel free to PM me and I will give you my contact info so you can call and I can talk you through some of it...If you deal with chemicals the EPA and others get involved to.. Jason.
     
  7. 33mopower
    Joined: May 18, 2008
    Posts: 243

    33mopower
    Member

    Don't forget you can also open an LLC and can limit your liability(financially) somewhat.
     
  8. Bear Metal Kustoms
    Joined: Jul 31, 2004
    Posts: 1,857

    Bear Metal Kustoms
    Alliance Vendor

    Yes, an LLC can give you some protection. It will seperate your personal possesions from that of the business..
    I personally converted my business to a full blown S Corporation... The problem is that if there is a failure or something deemed your fault the company will get sued and you better have the insurance to pay it because as the president of your company you are still financially responsible... Jason.
     
  9. safari-wagon
    Joined: Jan 12, 2008
    Posts: 1,457

    safari-wagon
    Member

    If you're working on a customer's car, I'd suggest that you make sure that person has insurance on it.
    Buddy of mine in Canada had his shop burn down & several of the cars inside were not insured, so those owners took a big loss (one of the cars was a 63 split wdo, OWCH!) He was tied up for months over this event.
     
  10. Brewton
    Joined: Jun 24, 2005
    Posts: 884

    Brewton
    Member

  11. krooser
    Joined: Jul 25, 2004
    Posts: 4,584

    krooser
    Member

    Contact your local, friendly independent insurance agent Dave. They can get you a blanket liability policy that will cover you. Prices can be pretty reasonable if you shop around.

    Ask about a lower primary liabilty policy of, say, $500,000 and a secondary policy (with another company) of another $500K or $1,000,000. The first company has it's exposure limited to the set limit and the price will be fairly low. The secondary polcy kicks in AFTER the first reaches it's limit...again this limits the insurance companies liability.

    I did this when I ran two dirt ovals and it worked pretty good.

    Good luck.
     
  12. twofosho
    Joined: Nov 10, 2005
    Posts: 1,153

    twofosho
    Member

    Better sit down with a commercial insurance agent that deals with garage liability, product liability, and the like, day after day, everyday. Try to find someone that's been at it for a while, has a good rep, and lots of favorable referrals. Be as candid, realistic, and accurate about your business and your product with the agent as possible. Also, don't settle for the minimum amounts. Buy as high a coverage limits, and as much coverage overall as you can afford.

    I don't mean to scare you, but this stuff isn't cheap, and even with it, one frivolous lawsuit can still bankrupt you.

    Although it's not really in the same category as a small job shop, my garage liability, just to maintain my dealer's license, runs around three grand per year, and that's before I spend a dime on anything else. Add in the state licensing fees, the required annual bond fee, annual state required training courses, and I'm looking at nearly another grand a year. That's with only one guy working with me, and little or no inventory at any one given time. Insuring more than a minimum physical plant, onsite inventory, customer vehicles, and product liability would be on top of that.
     
  13. 50dodge4x4
    Joined: Aug 7, 2004
    Posts: 3,535

    50dodge4x4
    Member

    And to add to what the others have said, if you plan on welding, you better have cert papers in hand. Also, expect them to limit what they will cover you to do. Life will also be easier if you have a way to prove you are capable of doing the things you intend to do. Insurance companies like cert papers showing you know what your doing, they also like annual rate increases. Expect to pay around $3,000- $4,000 up front mim, then expect the rate to be about equal to 10% of your shops annual income (as long as their cut is over the $4,000). If they don't think your premium is enough they will cancel you, reguardless of if they have ever paid a claim or not.

    Dealing with insurance companies is one of the biggest pains with doing business. Gene
     
  14. SakowskiMotors
    Joined: Nov 18, 2006
    Posts: 1,247

    SakowskiMotors
    Member

    You will probably pay 500 to 700 a month for a little insurance if you have no claims, even though it is pretty much useless. If something breaks, you are liable because they will say you did a negligent job witch voids any corporate shield, and your insurance company won't want to pay because they can say you were negligent.
    You are pretty much screwed opening a shop.

    If you tell the insurance your are building frames and suspension, they will probably drop you.
    Have fun.
    wil
    www.sakowskimotors.com
     
  15. fab32
    Joined: May 14, 2002
    Posts: 13,985

    fab32
    Member Emeritus

    ALL OF THE ABOVE and that's the good view. I've been out of a direct business for over 15 years and I still shudder to think of something happening to a job I did 20 years ago that's gone through 3-5 owners and been modified. If ANYTHING goes wrong with a product in these sue happy times there is a lawyer somewhere that will haul you into court like you committed murder and it's your reaponsibility to prove your not guilty.
    With that said I'll add that there is nothing like owning your own business and being part of the american dream of being self sufficient and maybe giving a job to someone who needs one. You just have to do it with eyes wide open, knowing the potential risk and covering your ass in the process.

    Frank
     
  16. Littleman
    Joined: Aug 25, 2004
    Posts: 2,619

    Littleman
    Alliance Member
    from OHIO, USA

    Thanks for the info.........more like overload and sounds like an overwhelming path to go down...........I cannot imagine the amount of guys doing work for money with nothing at all..I do not understand how you can open a shop with out proving to whom ever your real and following the rules....in that town or city ect. In these parts they say you can own a roofing company if you have a pickup and a hammer......I will have to call someone now that I learned some of the lingo...I learned from the responses...Thanks to all ,Littleman...I will add that the laws and rules make it hard to be legit.....and alot of people would want to avoid this subject...but just think of the risk...
     
  17. HulaZombie
    Joined: Feb 3, 2007
    Posts: 439

    HulaZombie
    Member

    Also talk to a business lawyer, And get him/her to understand what you are doing. They can also be very helpful in setting things up to protect your personal assets. You want to protect and separate what you have from your shop. Also if you purchase your own building, set up a separate business/llc to own it as well. They way if the business has problems is is separate and can not be part of any actions.
    So...personal separate from business, building separate from business, building separate from personal, etc... It sucks, but there is nothing better than working for your self !!
     
  18. SakowskiMotors
    Joined: Nov 18, 2006
    Posts: 1,247

    SakowskiMotors
    Member

    Also I wanted to add that you can not ever use your shop insurance. If you do, they will drop you like a just welded on bracket you try to pick up barehanded.

    If you make a claim and they don't drop you, your insurance will go through the roof from that point until you die.

    Don't do a shop unless you are a crazy fool Find a good shop and work there, make good money if you are good, and let the crazy fools deal with all the headaches. Doing the work is the easiest by far part of having a shop, after that it gets real complicated.

    Good luck in whatever you do
    Wil
    www.sakowskimotors.com
     

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