Business insurance for fabrication shop?

I know some here are involved in or have been involved in manufacturing car parts, doing fabrication work, or building kit cars. What do you do for liability insurance, who through, and any rough costs? I am thinking of getting set up to do some fab work for hire when my garage is finished and this aspect of it has always been the 900lb gorilla in the corner for me. Just wondering what others experiences has been. I will eventually pick up the phone and talk to a few agents but was wondering if anyone could give some ballpark thoughts/experiences.

Thanks

I had never thought about this. I have been building some motorcycle trailers for friends. Soon enough a not friend will want one and will be willing to pay for more then just materials. I will be following this thread, but i am interested if any one has additional insight into maybe even becoming a manufacturer that can issue vin numbers for trailers.

Figure on about what it cost for male teenage car insurance.

A bigger can of worms is that you won't get coverage unless you are a legally registered business. This is the insurance companies way of letting the city lower their risk by enforcing safety regulations. Once you go legit, you will have pretty much the same overhead as your competition, so you better be charging the same as the rest of the shops or you wont make ends meet. Cash opportunities are also somehwat reduced.

Will your city zoning allow for a business to run out of your house shop? Keep in mind that it might raise your home premiums also since "customers" will be lurking about. The city is not one to pass on a tax opportunity if they smell business going on anywhere, so property taxes could also go up.

If you do not need to net a profit, it is possible to make a hobby out of this and be legit in all respects.Gigure 25-30/hour to break even and figure on having to keep books and pay taxes as part of the hobby.

We use Sentry Insurance

Mine is through a local insurance agent. It costs about $2K a year for $2M general liability. The agency shops it around to different carriers ever year or two to keep the prices reasonable.

Manufacturing a product for the general public might make a difference in the price. We do mostly service and construction of commercial automatic entrance doors. Check you local agency.

NOHOME wrote: Figure on about what it cost for male teenage car insurance. A bigger can of worms is that you won't get coverage unless you are a legally registered business. This is the insurance companies way of letting the city lower their risk by enforcing safety regulations. Once you go legit, you will have pretty much the same overhead as your competition, so you better be charging the same as the rest of the shops or you wont make ends meet. Cash opportunities are also somehwat reduced. Will your city zoning allow for a business to run out of your house shop? Keep in mind that it might raise your home premiums also since "customers" will be lurking about. The city is not one to pass on a tax opportunity if they smell business going on anywhere, so property taxes could also go up. If you do not need to net a profit, it is possible to make a hobby out of this and be legit in all respects.Gigure 25-30/hour to break even and figure on having to keep books and pay taxes as part of the hobby.

This is an over-statement.

It's easy to get insurance for a home-based business. It is also easy to get a business license for a home-based business. They are completely legal in all respects.

If you are not zoned for manufacturing, AND have walk-in customers, AND/OR have an impact on neighbors which is not in keeping with the zoning regulations (noise, dirt, traffic, etc.) then you MIGHT cross a zoning line, but not an insurance line. You will only cross a line with the insurance company when you increase their exposure (like manufacturing fires, lawsuits from neighbors for harm caused to them, illegal manufacturing techniques, etc).

You can carry Product Liability insurance without carrying worker's comp or other insurances related to the manufacturing techniques.

An Inland Marine policy will cover the value of the equipment and materials for in-process work (I know that sounds weird, but it is what it is called).

I have a General Liability and premises policy, an Inland Marine policy, Commercial Auto, Product Liability, and a Retail Sales policy- all on my house in a residential neighborhood (in part for products I make in my backyard shop). I have 4 different businesses running out of my house.

The insurance company doesn't give a rat's azz about your local ordinances. They care about their profits and their risks.

BTW- stop calling it a fabrication shop ASAP.

It is your hobby shop until further notice.

What fab shop. There is no fabrication shop on my property.

Thanks for the input thus far. Sounds like I will be messaging SVreX when the time comes.

For the record my county zoning allows me to do general vehicle repair and trailer/chassis work but I cannot run a body shop. Kinda strange but I think for what I have planned I will not run affoul of zoning. If it ever got large I would be renting something larger and dedicated to take it off site.

Looks like I need to research incorporation and registration of businesses.

nocones wrote: . Looks like I need to research incorporation and registration of businesses.

I can give you some advice here. Either pm me, or I'll probably make the autocross this weekend.

Body Shops require Paint Booths. Paint Booths complicate the insurance more than you would expect. I had a classic car restoration business. I painted 1-2 cars a year and no one would insure the shop until I got a UL listed booth. I also had to have a business license before acquiring insurance.

Talking to a few agents would be best. I found a small independent agent that became my best friend with all things insurance. I had 2 policies - one for equipment and building and one for liability and to cover the cars in my possession. Both policies were around $2500 a year. Definitely made it easier to sleep at night.

+1 on the complications related to a paint booth.