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Thread: liability insurance question

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    Default liability insurance question

    I've got one frame under my belt, which will be a bike I ride so if it fails, I probably won't sue myself. I want to start building more, nothing serious, hobby stuff, maybe a frame or two a year, but I don't have a particular need for that many bikes. Recently suicideking made a post about his first frame and giving it away at a local race which sounded like a cool idea.

    I've considered doing something similar to help raise funds for various local cycling org's - however, there has to be some sort of liability issue with doing this. Liability insurance sounds like a must if you're selling your stuff, but wouldn't it also be necessary if you're giving a frame away?

    What sort of insurance do you carry and is there anyone in particular that specializes in covering framebuilders?
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    Default Re: liability insurance question

    It's not that complicated atmo. You have your local agent broker a policy from NIPC in Washington State. The rates are based on gross sales if I recall correctly. The rates are low. They are lower if you bundle them with your other existing policies. Mine is bundled with my homeowners and car insurance and the sum I pay is nearly 60 percent less than what I would pay for the three from different agents (not that I would...). If you get the liability package alone, from a specialist broker, you may be paying more than you need to. Read my lips - bundle the policies.
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    Default Re: liability insurance question

    I don't think the courts find any difference between taking money or not when transfering stuff to another. (Or at least that's the case in drug law, don't ask how I know that... Just passing along the item to your bud next to you is considered trafficing).

    The ethical thing to do is just build for yourself or get insurance. The reason for insurance is to make good to the person who was hurt, not to protect your assests. Andy.
    Andy Stewart
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    Default Re: liability insurance question

    thanks guys, sounds pretty straight forward and i'll do some checking with my ins rep
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    Default Re: liability insurance question

    Hey Prolix,

    http://whitaker-myers.com/

    They're based in Ohio. I've had really great service. Ask for Linda.

    330-345-5000

    Im getting health insurance for myself and the employee from them as well.



    Quote Originally Posted by prolix21 View Post
    thanks guys, sounds pretty straight forward and i'll do some checking with my ins rep
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    Default Re: liability insurance question

    Just have to say that Westlake has been a pleasure to deal with. Might be cheaper to bundle, but my home/auto agent really had no clue how to proceed with liability insurance. Laura rocked it.
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    Default Re: liability insurance question

    Quote Originally Posted by Dorman View Post
    Just have to say that Westlake has been a pleasure to deal with. Might be cheaper to bundle, but my home/auto agent really had no clue how to proceed with liability insurance. Laura rocked it.
    ?? He simply contacts NIPC in Washington State and gets the info for you and it gets submitted on your behalf.
    I'm a zealot for this, but I'm also a zealot for my own money. The bundling of policies helps me keep a lot of it
    that 2-3 separate invoice-ers would eat up in a heartbeat atmo.
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    Default Re: liability insurance question

    Quote Originally Posted by e-RICHIE View Post
    ?? He simply contacts NIPC in Washington State and gets the info for you and it gets submitted on your behalf.
    I'm a zealot for this, but I'm also a zealot for my own money. The bundling of policies helps me keep a lot of it
    that 2-3 separate invoice-ers would eat up in a heartbeat atmo.
    This is just one of the reasons you are invaluable. My current insurance agent couldn't get it done and I had to do it. In the future I hope to be able to take advantage of the groups knowledge.
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    Default Re: liability insurance question

    Quote Originally Posted by Dorman View Post
    This is just one of the reasons you are invaluable. My current insurance agent couldn't get it done and I had to do it. In the future I hope to be able to take advantage of the groups knowledge.
    +1!!! Laura may be nice to me but that check hurts to write every year and it keeps going up even though I stay pretty much right around the minimums. Many Thanks ATMO!
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    Default Re: liability insurance question

    Could this thread go into the framebuilders wiki?

    And somehow pop up next June?

    B
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    Default Re: liability insurance question

    What's a reasonable quote for liability insurance these days? My local agent found 2 quote's (not NIPC yet) for 5k a year!
    I am having them call both NIPC and Whitaker-Meyers, so what should I expect? Unbundled/bundled...
    cheers
    Andy
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    Default Re: liability insurance question

    Quote Originally Posted by afwalker View Post
    What's a reasonable quote for liability insurance these days? My local agent found 2 quote's (not NIPC yet) for 5k a year!
    I am having them call both NIPC and Whitaker-Meyers, so what should I expect? Unbundled/bundled...
    cheers
    Andy
    It's tied to gross sales. How reasonable are yours?
    Also, all the bundling depends on the model year of your car, the replacement value of your structure, how much inventory you want covered...
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    Default Re: liability insurance question

    Quote Originally Posted by afwalker View Post
    What's a reasonable quote for liability insurance these days? My local agent found 2 quote's (not NIPC yet) for 5k a year!
    I am having them call both NIPC and Whitaker-Meyers, so what should I expect? Unbundled/bundled...
    cheers
    Andy
    You can't ask that type of question around here. You wont get an answer. Laugh.
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    Default Re: liability insurance question

    Quote Originally Posted by Adam Eldridge View Post
    You can't ask that type of question around here. You wont get an answer. Laugh.
    What does that ^ mean?
    I replied.
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    Default Re: liability insurance question

    Sorry, I was just thinking I was getting ripped off by my agent. 5k a year for maybe 5-6 frames a year seems unreasonable to me.
    I was just looking for feedback , way too high, or about right...
    cheers
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    Default Re: liability insurance question

    Quote Originally Posted by afwalker View Post
    Sorry, I was just thinking I was getting ripped off by my agent. 5k a year for maybe 5-6 frames a year seems unreasonable to me.
    I was just looking for feedback , way too high, or about right...
    cheers
    I pay far less than that, and the premium is based on gross sales not units atmo.
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    Default Re: liability insurance question

    AFWalker... although based on gross sales, the minimum you will find a small manufacturer's policy that covers original fabrication liability is for around $1500.00 annually. Last I looked, that covered annual gross sales under approximately $35,000.

    The Gross sales categorization can also be a bit confusing for estimating as well, for both you and your insurance rep. One point I stress when evaluating my insurance needs is the difference between income from fabricated parts and resale parts, ie... your frames vs. components for builds. The insurance rates for your manufactured parts is higher than rates for resale components. If you do not separate and categorize your gross sales appropriately, you end up paying a higher rate and annual premiums than necessary.

    E-Ritchie also pointed out that other factors contribute to the final cost. The amount of machinary, tooling, structure, and computer equipment insured, added to other liabilities (in house painting, hazardous materials storage and reclamation) all factor into the cost.

    In my case, bundling would have saved a lesser amount...around 200 bucks. I chose to keep my policies separate, as the ease of tracking costs and business finances outweighed the monetary savings imo.

    Please remember to aggressively educate yourself, work with local folks, and decide on a policy that will protect your customer and your families livelyhood.

    rody
    Last edited by Rody; 08-13-2012 at 10:14 AM. Reason: clarification
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    Default Re: liability insurance question

    Quote Originally Posted by Rody View Post
    AFWalker... Please remember to aggressively educate yourself, work with local folks, and decide on a policy that will protect your customer and your families livelyhood.

    rody
    This last point is the most important IMO. Insurance should be about your customer. Andy.
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    Default Re: liability insurance question

    Just out of curiosity: If you buy a year's insurance, is that covering your liability for a year, or covering the products that you make for that year for a period going forward?
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    Default Re: liability insurance question

    Verryredbike,

    If one chooses to build frames and sell them for any amount, you assume accountability for your product and it's user.

    Liability insurance must be carried for that product from time of inception forward.

    As with any legal issue, there are differing legal opinions, but the common thought process as explained by my attourney is this:

    If you build a frame as an individual and receive monetary compensation of any amount, you are responsible to carry insurance on said product for life. Your annual insurance premiums are a continuation of that accountability.

    If you build a frame as a LLC or Corporation and receive monetary compensation of any amount, you are responsible to carry insurance on said product for the existance of the company, although the officers of said company may be found liable in future claims.

    The formation of the LLC or Corp is just a legal layer of personal protection which may/may not be effective.

    Bottom line is... building frames is a serious business with significant legal responsibilities to your customer. If you sell a product for any amount, you are bound to protect it's user in case of failure, now and in the future.

    Rody
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