Insurance for CNC in home shop. (searched and found a lot of outdated information)
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  1. #1
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    Default Insurance for CNC in home shop. (searched and found a lot of outdated information)

    Hi,
    Firstly, there are several threads on this topic but all of the information seems outdated because I've called those companies and have been told I am SOL by all but one (still waiting from a call back from Federated)

    Anyhow, I am in the process of buying my first machine, a new VF-2. I financed about half of it, and the bank needs an insurance policy to cover Fire/Theft/Liability on the machine. I asked for clarification by asking:

    “The insurance company has asked me if the equipment needs to be named specifically on the policy (serial number, etc) or if it can be labeled generically (by model) and covered under a “business personal property” policy.”

    And they replied:

    “As insurance goes, sometimes they require, sometimes they don’t care. As long as Banterra is listed as loss-payee that is fine. If you give us your agent’s name we can give them a call ourselves. We do it all day!”

    Well, so far I can't find anyone who is really even interested in talking to the bank.

    So for all you guys with a financed machine in a home shop, who are you currently using?

    Dead ends so far: Sentry, Farmers, Hartford Steam & Boiler.

    Haven't yet heard back from my Allstate agent (where i have homeowners and auto) or another guy that I found on youtube (HA!)

    I know when I have to explain what a CNC is that I am talking to the wrong person.

    Note I have zero employees and largely make stuff for myself but will be expanding to doing "customer parts to print"

    Does anyone have any advice?

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    Business with assumed name and billing and all that, or hobby use and some side money maybe?
    The expansion sort of a problem and you need a separate business insurance policy once you cross this line.
    Doing only "customer parts to print" helps keep the rate for this lower but yes a new and perhaps unexpected bill to be paid if going to make parts for others.
    I'd call a few local insurance agencies (reps) and say "Here is what I want to do. Can you help?"
    You are also going to want a CPA, perhaps a lawyer and they take a cut also.
    Bob

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    Quote Originally Posted by CarbideBob View Post
    Business with assumed name and billing and all that, or hobby use and some side money maybe?
    The expansion sort of a problem and you need a separate business insurance policy once you cross this line.
    Doing only "customer parts to print" helps keep the rate for this lower but yes a new and perhaps unexpected bill to be paid if going to make parts for others.
    I'd call a few local insurance agencies (reps) and say "Here is what I want to do. Can you help?"
    You are also going to want a CPA, perhaps a lawyer and they take a cut also.
    Bob
    I am operating as ctnewmanengineering (sole proprietorship right now) and have about 30-50k in sales per year (at 70k already for this year). I have been doing design only an outsourcing the machine work. In the end after all costs I basically break even.

    I have a CPA who does my taxes. I tried calling 3 local agencies and as soon as I said "metalworking" they started sending me forms to fill out about welding certifications and auto mechanic certifications. Not one of them even know what a mill or CNC was.

    I know I need to switch to an LLC but I hear even that doesn't do much to protect me.

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    Quote Originally Posted by xnewmanx View Post
    I am operating as ctnewmanengineering (sole proprietorship right now) and have about 30-50k in sales per year (at 70k already for this year). I have been doing design only an outsourcing the machine work. In the end after all costs I basically break even.

    I have a CPA who does my taxes. I tried calling 3 local agencies and as soon as I said "metalworking" they started sending me forms to fill out about welding certifications and auto mechanic certifications. Not one of them even know what a mill or CNC was.

    I know I need to switch to an LLC but I hear even that doesn't do much to protect me.
    LLC or C corp here or there.
    Maybe saying "machine shop" better than "metalworking". Tool and die?
    Other shops in your area that you can ask?

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    First, you need to find an agent that offers 'commercial insurance'

    Then go down and talk to them.

    not commercial auto, commercial. There is like one in every town.

    Not rocket science, but it is like asking the ice cream shop about steak, both food, but different things

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    Most insurance companies have no idea , even commercial ones. When you talk to them be vague.

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    We originally had the shop in a detached garage and could get a separate policy for the house and shop. I took the space between and connected the two. Could not insure them separately even though there were no doors between them. Ended up having to insure the house under the commercial policy and got renters insurance for the contents of the house. This maybe a Texas thing or a thing that has since been corrected. That was 20 years ago and now the house and shop are on the same ranch but insured separately.

    No clue if a machine can be insured by itself. Maybe a state insurance board question.

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    Try federated, they specialize in machine shops, and had them while in the garage.

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    I had insurance with a company for 7 years ( thru an agent).
    They switched companies and saved me money.
    The new company is Chubb insurance.
    Look them up online. They'll send you a questionaire, and I'm sure the bank\ finance company of your machine can help with some of the paperwork.

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    Quote Originally Posted by xnewmanx View Post
    ..the bank needs an insurance policy to cover Fire/Theft/Liability on the machine.
    I financed my first machine with Banterra. I paid for insurance through them for the first few months. It was maybe $45/mo. At the time, I had basic commercial liability insurance I needed to rent the warehouse, but I don't remember Banterra ever needing a copy of that. I moved the machine to my commercial policy when I upgraded to Sentry. Point is, ask Banterra. You should be able to pay them for insurance as far as I understand it.

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    Try Sentry- they are the insurance of choice for many NTMA members, so they know machine shops.

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    Quote Originally Posted by CosmosK View Post
    I financed my first machine with Banterra. I paid for insurance through them for the first few months. It was maybe $45/mo. At the time, I had basic commercial liability insurance I needed to rent the warehouse, but I don't remember Banterra ever needing a copy of that. I moved the machine to my commercial policy when I upgraded to Sentry. Point is, ask Banterra. You should be able to pay them for insurance as far as I understand it.


    Thanks for this tip. They quoted 95 dollars a month which seems so high for an 8500 lb piece of equipment that's in a locked brick building but it will probably get me by until I can get some actual coverage.

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    Quote Originally Posted by xnewmanx View Post
    Thanks for this tip. They quoted 95 dollars a month which seems so high for an 8500 lb piece of equipment that's in a locked brick building but it will probably get me by until I can get some actual coverage.
    Beats being dead in the water though Good luck

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    Is there a reason you didn't go with CNC Associates (Haas) for your financing? They can provide insurance as well @ $1/1k financed.

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    Quote Originally Posted by Wick Craft View Post
    Is there a reason you didn't go with CNC Associates (Haas) for your financing? They can provide insurance as well @ $1/1k financed.
    Thank you for this information!

    I went with Banterra because I wanted to bump the term out a bit (60mo). I don't THINK i'll need but want to be able to be sure I can safely cover the payments even if the machine is making zero dollars.

    Is that 1$/1k financed cost monthly? Does it only cover their stake in it? Or the complete machine? I know these are questions for them but maybe if you have some insight that would be helpful.

    I did learn that the Banterra insurance also covers operator error damage. I am not sure if that's common or not.

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    Quote Originally Posted by xnewmanx View Post
    I did learn that the Banterra insurance also covers operator error damage. I am not sure if that's common or not.
    Sentry does. The bank needs that to protect their collateral from you (and me)

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    Quote Originally Posted by xnewmanx View Post
    Thank you for this information!

    I went with Banterra because I wanted to bump the term out a bit (60mo). I don't THINK i'll need but want to be able to be sure I can safely cover the payments even if the machine is making zero dollars.

    Is that 1$/1k financed cost monthly? Does it only cover their stake in it? Or the complete machine? I know these are questions for them but maybe if you have some insight that would be helpful.

    I did learn that the Banterra insurance also covers operator error damage. I am not sure if that's common or not.
    No problem.

    Yes, the payment is monthly and tacked onto your payment. I had two options when insuring through CNC Associates with my machine. You could do the minimum and only insure the amount financed at $1/1k, or you could insure the whole value of the machine at at $1/1k. So hypothetically if a given machine is worth $50k and insured the whole value, it would be $50/mo tacked onto your monthly bill. Say half of $50k machine was financed and only wanted to insure at the minimum, it would only be $25/mo additional.

    Hope this helps.

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    The machine is at home. Put it under your homeowner's policy.

    Quote Originally Posted by xnewmanx View Post
    I know I need to switch to an LLC but I hear even that doesn't do much to protect me.
    Most small business owners have no clue what they're doing, or what they're in for, when it comes to legal protection.

    Your best form of protection is common sense. The most likely legal dispute you'll get into is nonpayment from a customer, in which case you will be the one suing the other guy.

    If you really piss off someone, he may come after you for something that isn't protected by insurance anyway, like fraud. Know what it costs to defend a BS fraud case? Mid 6-figures if the other guy is persistent.

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    Quote Originally Posted by Radar987 View Post
    The machine is at home. Put it under your homeowner's policy.
    If selling work I do not see how this works. The people doing the loan would have to be idiots.
    The OP needs insurance to get the loan and not other concerns.
    Bob

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    See if you can get your homeowners insurance to cover it. Just add a rider to the policy to bump up the value of personal property.


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