Business Insurance Woes

alphonso · Jan 10, 2015

My business, a job shop, has been operating for 37 years. Building, land, machines all paid for.

Only insurance claim was 20 years ago for lightening damage to machine control. Insurance coverage has been from several different companies over the years. Only reason for the changes in companies was that they quit me. Most bizarre reason given was the premium was too small for them to make a profit????????? Latest company to quit me says they don't want to cover machine shops anymore.

My broker/agent is having a hell of a time trying to find a company that will even offer coverage. Getting a little nervous as I have been naked for about a month.

Any recommendations of companies that I can point her to?

cnctoolcat · Jan 10, 2015

Sentry specializes in manufacturing companies, give them a call.

DavidScott · Jan 10, 2015

What does liability insurance cost for a one man machine shop? I only have it for my product line.

wrustle · Jan 10, 2015

We use "The Hartford" and "Harleysville" for our commercial, liability, and workers comp policies.

Had no problems getting them, however, I did go through an insurance agent who did and continues to do all the legwork for me.

Later,
Russ

Alloy Mcgraw · Jan 10, 2015

wrustle said:
We use "The Hartford" and "Harleysville" for our commercial, liability, and workers comp policies.

Had no problems getting them, however, I did go through an insurance agent who did and continues to do all the legwork for me.

Later,
Russ

I use an agent also, want to say I remember The Hartford no quoting me...But it's been a few years now.

Travelers is who I have business insurance with, and think I remember my agent saying it was the only place he found to quote a machine shop.

ewlsey · Jan 10, 2015

We use Cincinnati. Sentry does not offer product liability. That's a non starter for me.

InterL · Jan 10, 2015

My mom's recently retired from the commercial lines insurance business.

She says one reason nobody wants to cover machine shops is the electricals. According to her companies they see a big percentage of older shops that have been upgraded over the years to 200+ amp service but when the upgrade was made the utility company didn't change the cable for the service drop from the power pole. The utility's rationale was that the original 70 or 100A service drop was hanging in air so it had more cooling capacity and didn't need to be upgraded to higher gauge cable. The service drop from the utility isn't normally covered by code or inspected by local government so it just got by without question. A lot of those installations are now resulting in electrical fires.

My mom says that any commercial building with 200A or any sort of three phase interior service now gets looked at sideways by the insurance companies unless the building is less than 12 or 15 years old or you can demonstrate that the service drop is sufficient for your power demand. The same is starting to be true of houses that have less than 100A service drops. Companies won't write homeowners policies unless the both the drop and panel are upgraded to 100A or more.

You should ask your agent to talk to the underwriter and see if that's what's hanging them up. If so you might be able to get them to write you if you can show that the service has been properly upgraded all the way out to the transformer.

Good luck,
Dan.

david n · Jan 10, 2015

ewlsey said:
We use Cincinnati. Sentry does not offer product liability. That's a non starter for me.

Yes they do.

dstryr · Jan 10, 2015

We go through an agent who gets us Hartford.

rb07565 · Jan 10, 2015

Try EMC, That's who I use. I also know the other shop in town uses them as well.

alphonso · Jan 10, 2015

InterL said:
My mom's recently retired from the commercial lines insurance business.

She says one reason nobody wants to cover machine shops is the electricals. According to her companies they see a big percentage of older shops that have been upgraded over the years to 200+ amp service but when the upgrade was made the utility company didn't change the cable for the service drop from the power pole. The utility's rationale was that the original 70 or 100A service drop was hanging in air so it had more cooling capacity and didn't need to be upgraded to higher gauge cable. The service drop from the utility isn't normally covered by code or inspected by local government so it just got by without question. A lot of those installations are now resulting in electrical fires.

My mom says that any commercial building with 200A or any sort of three phase interior service now gets looked at sideways by the insurance companies unless the building is less than 12 or 15 years old or you can demonstrate that the service drop is sufficient for your power demand. The same is starting to be true of houses that have less than 100A service drops. Companies won't write homeowners policies unless the both the drop and panel are upgraded to 100A or more.

You should ask your agent to talk to the underwriter and see if that's what's hanging them up. If so you might be able to get them to write you if you can show that the service has been properly upgraded all the way out to the transformer.

Good luck,
Dan.

400amp 240v 3ph. service. Utility company replaced transformers about 5 years ago. 1M quadruplex S.E. 26 year old all metal building. Fire Hydrant 120 ft from corner of building.

Agent has said that none of the companies she has contacted have said they will provide coverage. Several have given her ballpark estimates that are 4 to 5 times higher than anything I have ever had to pay before.

MK Proto · Jan 10, 2015

I have Hartford through my insurance agent.

IAMATT · Jan 10, 2015

DOOOONT WORRY someone jack hole insurance agent out there will be happy to take your money

WILLEO6709 · Jan 10, 2015

It depends on your business model. The number one thing insurance companies want is someone else to be to blame.... so when asked what you make: parts to customer engineering data. When asked what it goes into : never say anything to do with firearms, weapons, planes, trains, or automobiles. Most insurance companies do not understand the business enough to be comfortable in it, especially if you have your own products. It may be how your application is filled out, it may be your business model....

Mud · Jan 10, 2015

I've had 5 companies in 35 years, been dropped by some large companies, usually without notice or reason. I make automotive stuff which complicates things. I'm currently with Westfield, try them or Mutual Benefit. Also try talking to the largest insurance agency in your area, they usually have access to every underwriter, where smaller agencies won't have the same access.

Tonytn36 · Jan 10, 2015

Might have her try FM Global also.

alphonso · Jan 10, 2015

WILLEO6709 said:
It depends on your business model. The number one thing insurance companies want is someone else to be to blame.... so when asked what you make: parts to customer engineering data. When asked what it goes into : never say anything to do with firearms, weapons, planes, trains, or automobiles. Most insurance companies do not understand the business enough to be comfortable in it, especially if you have your own products. It may be how your application is filled out, it may be your business model....

When I started the business I bought the automotive machine shop equipment and business that was in the back of the local NAPA store. That stuff is long gone, but I was able to to retain the cheaper automotive classification because I continue to build driveshafts, face flywheels and turn big-truck brake drums. Also, one of my customers manufactures industrial clutches for which I machine his bellhousings.

I haven't been asked to fill out any applications yet.

cnctoolcat · Jan 10, 2015

Only one insurance company advertises in the metalworking trade magazines: Sentry.
I buy direct from their regional rep. And yes, they do offer product liability insurance. I have a million bucks worth.
Of course if you do work for the "risky" industries (aerospace, automotive, medical, powersports, etc) product liability will cost a LOT more than if you just "machine parts to customer specifications."

There's a reason aerospace shops charge a fortune for machining, and it's not necessarily because the work is highly complex. It's because of the insurance coverage required...

ToolCat

motion guru · Jan 10, 2015

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brianweldor · Jan 11, 2015

Try Westfield. Just got a quote for 1/3 of what I was paying. Happy New Year!!

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