What is the going rate for Liability Insurance in a one man shop?

This is a one man shop. Just me. I recently found out that this is necessary to continue doing business with my main customer. I mostly make new parts: wrenches, tool hangers, bulletin board enclosures, pallet racks, sinks, rag chutes, etc. There is machine work and welding. All welding is done at my shop and then the entire asembly is delivered, or bolted on to the item at the plant.

They want me to have $1 million in Liability insurance to to the contracting.

Thanks,
JAckal

Two man job shop, about $2500 a year for a $1,000,000 liability policy.

Now the question is, why does your customer want you to have liability?? Are they the end user and plan on suing you? Or do they sell your parts and don't carry liability themselves and hope that if something screws up, you get sued since you have the insurance?

BTW, do not mention the word "aircraft" when trying to get insurance, tell them you make parts to customer supplied blue prints, and you have no idea what they go to.

Liability

$1100 a year 2 man job/ prototype shop 1,000,000 liability I concur on the "aircraft" comment

I'll third the "aircraft" comment.

Other industries to "avoid" when talking to the insurance man is mining, motorcycles, and automobiles.

Make up some "safe" industries as your customers. Things like golf, signs, etc.

Toolchaser, do you mind throwing a company name out there. I'll admit we didn't shop around too much on the $2500. Got strung along and hung out to dry for a few months due to the mentioning of "aircraft" and then needed it NOW!!

I for one don't like this advise being given about lying to your insurance company. If there should be a claim against you and they find that you lied on your aplication, thats insurance fraud and they will drop you like a hot rock, possibly refund your premiums and leave you with no coverage.
Thats my $0.02 worth on this subject.

No, no, no...nobody said to lie.
If not asked specifics, why give specifics.
"We manufacture clients' parts per print would not be a lie."
If they ask specifically "aircraft parts?" then "I don't know where they go, or what on" would be a sufficient answer. "Who are your clients?"
"Whoever pays the bills!!!"

Not necessarily lies...call it politics. Witholding information is not a lie!!!
See...it all depends on what your definition of "is" is.

I wouldn't call it lying either, our problem was that we were doing a lot of different things with our Farm Bureau agent, so she was here at the shop quite a bit for several months. She was curious asking what stuff was and what it went to.

So when it came time for liability, she put down on our application that we work on airplanes, not that we make replacement parts from blue prints that are signed off on by an engineer, and supplied by a customer or the government.

Several companies would have insured us, but we needed to be located at an airport.

I think the thing is to very carefully read the fine print on what the insurance company excludes from coverage. You might very well be machining golf tees for 10 years, then switch over to making jet engines The fine print will tell you what is excluded. You simply cannot trust insurance companies, they will be all nice and cordial when taking your premium, and then turn the dogs on you when someone goes to sue.

You mention being a 1 man shop. Is your shop on land zoned commercial or do you work from home? I just wonder if it makes a difference to the insurance company. Seems if they won't insure a shop on residential land then they likely won't insure for liability or anything else either?

Westfield Insurance out of Ohio ,you can find an Underwriter in your state

I pay almost $1300.00 a year for a Million dollar liability policy through Farm Bureau Insurance. I told them I did no welding in house and no aircraft parts.

A good agent will help you, sometimes. For instance, a friend was told by his agent that he did not have a "wrecker", but a "winch truck", which saved him a young fortune...Joe

Well, I ended up with $1710 a year. It covers welding, manufacturing, and installation inside the factories. Everything was explained, so when I get my policy description it will let me know more. I may be covered for portable welding.


Thanks for the replies & info,

JAckal

bluechipper said:

No, no, no...nobody said to lie.
If not asked specifics, why give specifics.
"We manufacture clients' parts per print would not be a lie."
If they ask specifically "aircraft parts?" then "I don't know where they go, or what on" would be a sufficient answer.

Click to expand...

If you do know where the parts go that is indeed a lie, and knowing insurance companies they will make sure it haunts you.

Knowing that the issue will come up I'll suggest a preemptive strike instead, with a small note as part of your insurance quote request describing in general terms that you take on jobs involving machining, welding, whatever, according to customer's specifications. If the insurance company wants to restrict you to not work in specific fields that initiative will have to come from them. Otherwise you will have a written account on your dealing confirming your range of work, and that anything with specifications are good to go.

Welding can also be a NO NO!
When I checked a lot of companies wanted to quote me 10% of my gross. I told them I didn't need a partner I just needed insurance. They don't like to insure new companies, they like a few years in business. They also can check your credit score.
I have 2 million with Auto Owners for just over $1000. Not all insurance companies write in all states. Be sure to get as many quotes as you can and watch the differences.

Toolchaser said:

Westfield Insurance out of Ohio ,you can find an Underwriter in your state

Click to expand...

On the $2500 I said we were paying for liability up above, that also included insurance on the equipment, however I can give you the name of the company and why they will never get any business from me ever again.

First, back at the beginning of the year trying to get this company to send a specific rider to the leasing company saying that their machine was covered, took 4 months. Apparently this is very simple standard fare and should not be a problem in the slightest, it was.

Ran out of payment coupons in Sept, called, they said we were all paid up until the beginning of 2009 and they would send another payment book when it was time to start paying again.

Fast forward to a few days ago, get a letter in the mail saying our insurance had lapsed as of Oct 26, its Dec 6th now. That was a nice warning, and we owe them almost $900 immediately. A few phone calls later since the payments didn't add up we found they jumped us to $3400 a year and our agent had been fired and apparently nobody could be bothered to figure out what they were doing or who they were insuring or even who owed them money.

Status Insurance out of Florida, if I ever recommended them to you, you can shoot me. What a bunch of hacks.

Went with Toolchasers recommendation, found a decent agent local. The guy moved quick. $1700 plus a little a year for $2,000,000 in liability, $1,000,000 per incident. $100,000 property insurance, $250,000 in lost revenue, $5000 personal property, a whole bunch of other crap all the way down to a $1000 on trees and shrubbery.

Hopefully this works out better.