General Laibility Insurance anyone?
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  1. #1
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    Question General Laibility Insurance anyone?


    I am a one man shop with a Haas VF2 looking for machining work in Oregon. I applied on-line to become a parts machining supplier for an aircraft company.
    They ask for General Liability Insurance. That is a requirement to complete the application.

    I contacted several insurance companies and asked for quotes. They act like they have never heard of machine shop General Liability Insurance.
    "we don't have that but I will transfer you ----" If you are a dog walker, or pastry baker they can help you. I finally connected with an insurance agent in the Northwest, told him I only need insurance for this one potential customer. He said rates start at $5000 per year.

    Am I barking up the wrong tree here? I don't have any products to insure, only machining parts to customer specifications, no assembly.
    Has anyone else run into this? 5K sounds way out of line for one potential (maybe) customer. Does anyone know of a low cost insurance company, or should I look for different customers?

    Thanks, LN

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    thats less than 500 a month thats pretty cheap liability insurance

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    If you want to play with the big boys, you have to pay like the big boys! Some clubs have steep entry requirements. Gotta understand its real unlikely for a dog walker to ground a few hundred air lines were costs can escalate faster than you can type digits in a calculator. In aviation a bad part might not just ground - crash a plane, it may ground every model of that aircraft - every aircraft with that part fitted, that has some significant costs!

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    As a 1 man shop and you say this ins. would only be for one customer, if you add $5k to the price of their parts what happens? Loose the job?
    On the other hand is there any chance you step up to a bigger customers with this new ins? Or do you not need more work.

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    5K is way out of line. I am in Portland, one man shop. My CGL policy is through Federated. 2M liability, premium is about $125/month. It's based on gross sales. I pay a "minimum" because my sales are below the threshold. (something like $350K before the rates start going higher)

    Federated will not ask what a machine shop does...

    If you want to talk to him, my agent is Riley Showalter. 503-477-6900

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    Insurance is a pain in the ass...

    I don't even remember who my old company was, but I didn't even own the building and it was $386 a month.
    2 mil general liability, a few hundred k on the equipment or some crap.. Then I bought the building and
    the previous owner was paying over $300 for the building itself, so I figured I was going to get woo-hoo-ed
    in the butthole..

    Farmers, not Farm bureau. 1 or 2m in general liability, 380k on the building, 280k on the equipment.
    Fire, theft, all that crap... Started at $125 a month and now its $156...

    Shop around I guess... Its a pain in the ass, most places can understand a vehicle repair shop,
    a bakery, a convenience store... But try explaining metal working to them.. Just where the hell
    do they think all this *Stuff* in the world comes from?? it doesn't just magically appear on
    Walmarts shelf.....

    And you want GENERAL liability, you DO NOT want product liability...

    And you make parts to prints that the customer supplies.. You don't
    make anything that goes on an airplane. Even though what you make
    shouldn't matter for general liability, they seem scared that they will
    get drug into something that they have nothing to do with.

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    Quote Originally Posted by Bobw View Post
    ...And you make parts to prints that the customer supplies.. You don't
    make anything that goes on an airplane.
    ^^^ This.

    Do not tell them you are making aerospace parts. Just tell them you are a job shop that makes things to a customer's specification.

    You don't know what they do with the parts, and you don't care.

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    I pay around $4k per year for $1 million liability plus $1 million umbrella.

    I used to have product liability in that policy. It was no big deal. I think the only thing they would not cover was play ground equipment. I could build and sell killing machines all day, but I couldn't even look at a swing set...

    I still pay around $4k per year, but now I have garage keepers insurance and lots of commercial vehicle crap that most machine shops don't have to deal with.

    It's very hard to find an insurance company that will talk to you when you first start out. I remember talking to about 6 agents and it took close to 3 months. If you need commercial vehicle insurance, it's way, way worse.

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    Most all of our customers require liability insurance ranging between $2-$5million and because we have the right kind of insurance, they ask you specifically when you do work for Boeing if you are required to have an aerospace rider. And if you jump though all the hoops with a quality program, security, data management, etc. that most aerospace companies require, insurance will the the cheapest / easiest hurdle of them all.

    Insurance is overhead - just like rent, electricity, water, sewer, phones, etc. Overhead is applied to every part you sell.

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    A little OT... I have paid car ins my whole (driving) life (26?) years, and used it once because of my fault, skidded in the snow and hit a street sign, right next to my house. Ins went up after I made the claim, even though it was the FIRST time I used it in 18 years or so with the same company.

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    I also use Federated. Started out as a 1 man shop a few years back. 5k per year is too much for just you.

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    Quote Originally Posted by ewlsey View Post
    ...If you need commercial vehicle insurance, it's way, way worse.
    It surprised me to read that. I put a commercial policy on my F150 a few years back. It was half the cost of my personal vehicle, and I did it all on the phone in just a few minutes. It's a year policy too- my personal vehicles are all only for 6 months.

    It also covers personal use of the company truck as long as it's not my primary driver.

    Interesting how much variation in the experience of just a few members here. It kind of illustrates how much price gouging goes on in the insurance business. If not gouging, at least shenanigans.

    They all use the same NAICS codes when they underwrite the policies and the actuarial tables are what they are. The prices should be consistent but they're all over the place.

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    I have a few customers that have there own requirements. If I had a 6 million umbrella and a new customer requires more, I just tell them I have to add the additional insurance requirement into the job. Half the time they say don't worry about it. The other times they don't care and we get the jobs anyway. Little different for me than machine shops. But jumping through hoops will get you in the door.

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    Wow, This is great information. Thanks Guys. I told the insurance guy my income was over 100K a year, because I had a project manager job last year. Now I realize that is not machine shop income. So far in 2019 I have made $1600 with the milling machine, and only about 4K last year working part time. I guess I don't need to tell them I need insurance for aircraft parts, because I have not done any of that work yet. My next phone call will be Federated.
    Thanks and keep the replies coming, this is a great resource.

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    Quote Originally Posted by jancollc View Post
    It surprised me to read that. I put a commercial policy on my F150 a few years back.
    Try that with a class 8 truck and see how it goes. I know a guy who's paying $18,000 a year for insurance on a dump truck.

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    i'm sorta in the auto business and, among other things, manufacture (and sub out) parts for obsolete vehicles. in the 90's my liability ins through a friend was over 20k a year. he died then i shopped around. There was a HUGE difference - dropped to 9k. at this point, semi-retired, i'm paying around 2k. point is shop around.

    always is the question "are you selling parts you do not install". don't know about aircraft parts but your customer should have specific ins requirements i think.

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    Quote Originally Posted by cg285 View Post
    in the 90's my liability ins through a friend was over 20k a year. he died then i shopped around. There was a HUGE difference - dropped to 9k.
    With friends like that, who needs enemies ?

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    You might try Hartford, 5K a year is way more than I pay. Last year I paid $2300 for 1m general liability, 300 hundred in equipment and all the stuff that goes with it. 5k even with 100k in sales is pretty extreme.

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    Quote Originally Posted by gary-sc View Post
    You might try Hartford, 5K a year is way more than I pay. Last year I paid $2300 for 1m general liability, 300 hundred in equipment and all the stuff that goes with it. 5k even with 100k in sales is pretty extreme.
    The Hartford was the first company I went to. I also live in the Portland area. I have a home based shop and am above that dollar number; they said I did not gross enough to be considered! They were maybe the only company I saw that specifically mentioned home businesses on their website and they wouldn't touch someone that was grossing above 6 figures...

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    Quote Originally Posted by EmanuelGoldstein View Post
    With friends like that, who needs enemies ?
    An ex chicago bears player once told me "gotta F**k your friends cuz you're enemies aren't doing business with ya"


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