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Insurance Questions

Fal Grunt

Titanium
Joined
Aug 5, 2010
Location
Medina OH
I am curious how you guys handle your insurance. Mine is killing me. I just got a renewal questionnaire from my insurance company, and after talking to my representative, I have to fill this out every year now.

Including specifically detailing everything I manufacture from raw materials.

Insurance is by far my largest operating expense every year and I feel like it is becoming a noose around my neck. My premium went up 10% this year, over the 10% it went up last year.

I see all kinds of guys on here posting about machining firearms, automotive, and aerospace parts, how do you guys afford insurance? Who do you have insurance through? Or do most people just bold faced lie about what they make?
 
They have commercial "property" liability that most companies get due to needing it to cover high dollar CNC machines. Then they have Commercial "Product" Liability insurance. This covers the products you make from you getting sued by the end user.

I am a job shop and the parts I make are not engineered by us. We make other peoples parts and therefore do not need the insurance due to us not having any products to be liable for.

My machines are all worth scrap so no need for the insurance. Dont own the building so thats on the landlord.

I will be needing comm. prop. ins. for a cnc if I have to finance one. Also called "Collision" insurance. I have not had good luck looking into that either. I guess The Hartford is well known for it but is expensive. Most ins companies wont touch it.

Good luck.
 
They must totally misunderstand what kind of machine shop you are.

When I first met with the insurance guy I stressed that I am a job shop. A contract manufacturer.
I make parts for other company's products. I don't design, I don't do engineering. I simply make whatever is on the blueprint.

I showed him a print and asked him if he knew what it was. He said no. I said neither do I.

He got it pretty quickly.

My policy is with Cincinnati Insurance Co. It's about $1400/yr.
Agent is Graydon Toole Group. 440-349-3670
 
They must totally misunderstand what kind of machine shop you are.

When I first met with the insurance guy I stressed that I am a job shop. A contract manufacturer.
I make parts for other company's products. I don't design, I don't do engineering. I simply make whatever is on the blueprint.

I showed him a print and asked him if he knew what it was. He said no. I said neither do I.

He got it pretty quickly.

My policy is with Cincinnati Insurance Co. It's about $1400/yr.
Agent is Graydon Toole Group. 440-349-3670

I will give them a call.

I tried the job shop routine with several insurance companies. They ALL wanted a list of everything made. One wanted a list of everything I had machined for the last 4 years, the customer, and the industry it was for.
 
Please report back on how it goes. We are in an a similar situation. Our premium for a 3 man shop is over 5k. Most insurance companies wouldn't even consider us because of the perceived liability.

Insurance and liability is one of the many obstacles that make it hard for little guys to run "legitimate" businesses. It feels like nobody will take you seriously until you have at least a few million a year in sales.
 
My shop in Tennessee had State Farm for general business insurance and Safeco for the vehicles. I had the same thing where once a year they came in with a questionnaire on what we machined and I just kept it at general purpose agriculture. Later on we started making FAL folding cocking handles for DSA and they actually let me get a seperate writer for gun parts so that was a welcome break not having to get reclassified.
 
I had Federated for a few years and was very happy with them, but when my business shifted to more welding and fab, they wouldn't cover me as a machine shop. They still had a company under their corporate umbrella that they could cover me under, though. I now carry my general liability and property ins under AmTrust.

I also am a job shop, and I stressed that we don't do any engineering or product design here. My premiums are around 2k/yr or so. Workmans comp is another $1800/yr on top of that for 1 employee.
 
They must totally misunderstand what kind of machine shop you are.

When I first met with the insurance guy I stressed that I am a job shop. A contract manufacturer.
I make parts for other company's products. I don't design, I don't do engineering. I simply make whatever is on the blueprint.

I showed him a print and asked him if he knew what it was. He said no. I said neither do I.

He got it pretty quickly.

My policy is with Cincinnati Insurance Co. It's about $1400/yr.
Agent is Graydon Toole Group. 440-349-3670

This is exactly the approach needed. Insurance brokers get paid when they sell you the highest premiums. They oversell so much not only to cover your dumbass for leaving out the important stuff that needs to be covered but to make money to buy themselves the daily necessities.

Only insure what you need to insure. Underwriters can write a policy tailored to your situation. The downside is they dont do it everyday and there arent many of them around to compete.
 
I put a call into Sentry and Federated and I felt like the phone calls were positive...

We had trouble with Sentry at first as they saw what we made but didn't understand from the part manes what they were, we were able to clear it up for them with assy drawings and things have been fine. We make some automotive, dirtbike and firearms parts but nothing that holds on the wheels, brakes or makes them go boom, once they understood the parts everything was good. Desk jockeys and bean counters don't tend to understand what anything is or how it works.
 
We had trouble with Sentry at first as they saw what we made but didn't understand from the part manes what they were, we were able to clear it up for them with assy drawings and things have been fine. We make some automotive, dirtbike and firearms parts but nothing that holds on the wheels, brakes or makes them go boom, once they understood the parts everything was good. Desk jockeys and bean counters don't tend to understand what anything is or how it works.

I think that is the problem I am running into.

I felt good about the calls last night, but this morning as I run the phone call back through my mind I am questioning myself.

The fellow from Sentry thought a Machining Center was a big building that I had purchased and he asked if I did architectural drawings.

I struggle with being "honest". My wife has never once asked me how she looks in a particular outfit because she knows I have no interest in bending the truth. She will tell you that I am "too" honest.

So when I am asked if everything is made to print, I can't honestly answer yes. I answered that everything is made to customer specifications. I often have part A that needs to be fit to part B. I have a blueprint for part A, but part A wasn't quite machined to print anyway, so it is a moot point. I machine part B to fit part A.

Or of course, I have gotten blue prints, from the schmuck across town, to Tier 1 Automotive that was drawn on a piece of trash, with little to no information. Or even better when Tier 1 sends you a print with very little information on it, and then throws a fit because the information that was on it was wrong, and the dimensions that were not dimensioned don't fit!

Or when a customer ships me a part, in pieces, and says, we need 5 of these, we have no clue what they are made of, their kinda precise, and they need to be hard. "How soon can we have them"? How do I answer that it was made to print? I feel comfortable saying I made them to customer specification... but is that the right answer?

And I know your thinking it, so just to clarify... I am the guy that looks at an extremely complex 8 sided part with angled cross holes and stupid dimensions and moronic finish callouts for an hour and then says, yea... I think we can make that. And then stares at an 8" round, 1" thick disc for an hour and then says, yea ... I think we can make that. I over think and over complicate the simplest of tasks, which is why I tend to steer myself towards the complex.
 
Being honest doesn't always mean offering up every detail to someone that has no clue what you are saying, as you know when most folks get confused in such situationd they tend to assume you are simply telling them how stupid they are, then they charge you accordingly.
Your customers supply you the drawings and you make the parts, they don't need to know the details that make it possible as they are not skilled in that for the most part.
I was once making a prototype part for Litton Industries, the draftsman made a typo ( pre CAD ) and had the ID larger than the OD, he was new and arrogant, my explaining it to him didn't help. I got a small box and filled it with copper shavings and sent it to him with a bill. A couple of days later he called, explained to me that he had made a mistake and wanted to know if the replacment part would cost the same $4500. as the first one. When I told him what I had done simply to get his focus he was very apologetic, we became friends and the next time I had a problem with his drawing he was eager to work with me. Insurance people don't want to know about this stuff.
Make stuff as complicated as you like in the shop but simple as you can with your insurance agent or they will charge you for the confusion, just as you might your customers when they confuse you.

No "bold Face Lie", just not every detail, machinists are too detail oriented for most folks.

My mother, like most people, lived her whole life thinking the lines on her wooden yardstick were too precision ( 1/8's).
 
Here is an example of Ski Resort Insurance. I was curious in the past about running a ski resort. I liked learning how to make snow and the business side of things got me interested in why so many of them fail.

I was told that to find someone who can write you a tailored policy to your needs you should find someone who skis. Lots of These insurance types ski in their free time and know the industry inside and out. They can tailor the policy to your specific needs.

Just like you mentioned having a "Machining Center". Must be a pretty big building with lots of space and lots of room to insure expensive machinery. Sounds like a high cost policy dont ya think? This is what they dont understand due to them not being familiar with this line of work.

The guy on the phone doesnt know what you do, look like, how you behave or your customers. Its up to you to get them to understand your situation, which can be very hard. 2 people living in 2 totally different worlds trying to find common ground is difficult.

Finding an insurance agent who is familiar with machining is a task in itself. Not many insurance agents run CNC's in their free time, or run a business on top of that. This is why getting a tailored policy for your situation can be very hard. You want to make sure everything you would ever need is insured and you will forget something. The agent will forget something as well (not intentional).

You may end up with a good price and then realize you forgot to add something and when you do the policy goes up too high. It can be very hard to plan for these things.

I wish you the best of luck. I will need insurance at some point if I finance a machine and I will be looking right at this thread for help.
 
I have an older "60's" building that i had trouble finding coverage and Sentry came knocking on my door been with them ever since, 30 years.
 
We use federated. I have a local rep that comes in and walks me through everything. He takes the time to see what we do, and understand our needs. Business insurance is way more complicated then I have time for. Find a rep that is willing to help you and you can trust.
 
I know a fellow who was making a part for Toyota that failed. He is subject to a law suite and moved from his big house to a very small one.. I don't know him very well so won't find out much more...
 
I know a fellow who was making a part for Toyota that failed. He is subject to a law suite and moved from his big house to a very small one.. I don't know him very well so won't find out much more...

Is that like a regular suite, but has laws in it?

:D

(just busting your balls in good fun)
 
You need to start by defining what kind insurance you're talking about....the post you are getting cover lots of variety
 








 
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