Short questions often evoke lengthy answers: why? how? and so forth...here is one such question.
We are thinking about adding a rodbuilding section to our flyshop and have found that it would require a new and very, very expensive classification of insurance:

Why is rodbuilding considered manufacturing while flytying is not?

And we are using the term rodbuilding loosely meaning simply slapping on guides and preformed grips for a shop specific brand of rod.

Brandon,
I will bet a nickel that your insurance company is giving you the insurance rates for blank manufacturing which involves a lot of machinery and would naturally have higher insurance rates. But higher insurance rates for rod building verses fly tying makes no sense. It is either that or you need to look fro a new insurance company.

That's what I thought Emory; however after contacting them and describing the process and what was involved they say that it is an industry standard to require the manufacturing label upon that form of work...

Hi Brandon - I dont see it as any different than slapping some thread and feathers on a preformed hook. I have no idea why fly tying is not manufacturing because I take components (thread, hooks and feathers) and put them together to make a piece of equipment (lure) to catch fish. How is fly tjying any different than making a lure or rod for that matter? By the way we are building a rod because otherwise we would be building a blank or a Pole(ie cane/bamboo)
Isnt fly tying involved with excise tax?

Maybe someone out there in "Insurance land", could shed some logic on this.
Could be part of the risk management theory they operate on.

I'm gonna follow this thread for my own risk management risky risk.



Good Wrappin !
David A. Fuller,
Great Basin Fishing Rods
Full-Time RV'r Traveling- n- Fishing
www.mytripjournal.com/FullersBigAdventure

Brandon,
Doc makes a couple of good points. It does not make any sense to me unless it is just some arbitrary category change. Have you checked with other insurance companies?

If you are looking at the insurance industry for logic you'll be out of luck. They charge whatever they want. I think they have people working full time coming up with excuses to raise policies. "You bought a new car? Your premiums will increase." "You bought an older car? Well it costs more to insure old cars. Your premium will increase".

Darrell- lets not be assuming all insurance is like this. It's not like they just throw the pricing models out the window when assigning a premium to your poilcy or any policy for that matter. Blame your state insurance regulators, they after all, are the people who are the real powers that be. The insurance companies must bend and change at there behest or the product will not be available for sale in that state. Not to mention the exorbanant amount of fraud that they deal with....just the legal fees for this can total in the hundereds of millions a year for this. There are many different classifications of insurance not just insuring property. Anyway-

I would ask them what they are insuring-what there coverages are etc. Sounds like to me they are trying to throw you under some type of total coverage policy-meaning- people, parts, products, liabilities etc. Looks like to me that you need to tell them what you want covered instead of letting them decide.

Both fly tying and rod building are subject to the Sportfishing Excise Tax, if any of those flies or rods are sold by anyone.

My question would be what this insurance is for. Is it just a rider to your existing liability insurance to protect you in case of a rod building class accident? If they actually have that spelled out in the policy there may be little you can do about it. But you could contact other insurance companies on the chance that another one may see it differently.

..............

i have been an insurance agent for 30 years. the problem is that insurance companies have broad catagories of risks . it is really difficult to gather statistics for rating every single type of manufacturing operation. rates come from actual experience and custom rod building is a rather small industry. probably not much actuarial experience available for companies to build a rate model from. so, they lump you into "manufacturing". some companies (like mine) won't insure
ANY manufacturing operation (expecially here in california) because product liability is such a bugaboo here. don't blame the insurance companies. they are just the messenger. the real problem is the lottery mentality in the legal system. certainly, manufacturers are responsible for many ills and evils but the legal system is responsible too. rates reflect the insurance companies
cost of doing business and thier actual losses. with a large and healthy insurance industry and a free market, if insuring manufacturing businesses did not represent a high probability of loss insurance companies would COMPETE for this business and rates would be low.

the policy you currently have is designed around the risks inherent in a retail store. the rates charged are a reflection of that type of risk. the risks involved are fairly benign compared to a manufacturing risk, which goes on forever once that product is in the consumers hand. it is the products liability thing. in a retail store the deep pockets are usually the manufacturer of the product. if a products liability claim is brought against a retail store the insurance company can usually get declaritory releaf and push the liability for the claim onto the manufacturer and releave the retailer of any responsiblity. the rates charged reflect that fact. when you change the perameters and risk assumptions by having a situation where the retailer is manufacturing something the whole probability of loss changes and the rate being charged no longer reflects the risk to the insurance company. it is hard for an insurance company to differentiate between a pretty mundain operation like rod building and some other more dangerous product. when the insurance company files its rates with a department of insurance it has to file and FOLLOW its underwriting guidelines. so they simply say we have a different rate structure for "manufacturing". they can't say (or should not say) well, this is just rod building so we will ignore the underwriting rules we have filed with the commissioner. the first time they get audited they get fined for violating their own underwriting rules. frankly, i'm surprised they let you get away with fly tying. i think an agent just looked the other way on that one. not that it poses a big risk (although i have hurt myself with flies more than i have with rods) it IS manufacturing and does have some small but inherant products liablity risk that is not being charged for in your premium. its all PERFECTLY logical. just anoying.