I read an earlier post on starting a rod building business. The responder said to try the search button for : Starting a home rod builders business. I did a search with all kinds of information on: taxes, licenses, the cost of starting a business, etc. Just page after page of information.

Not one word was mentioned about insurance. ( No, I am not an insurance salesman). Do you guys operate with out insurance ? My wife worrys constantly about being sued if I even spit in the streets. If I was to go sell a rod with out liability insurance it would hit the fan. This has kept me from doing so.

If you do have insurance, what kind of coverage do you carry?

Do you count on your household coverage to cover? Mine will not.

Do you see a reason to have insurance with the exception of a rod breaking and someone getting hurt?

I checked with a couple of ins. cos. and it would cost $700.00 plus per year!!!!!!!!!!!!!!!

This is such a sue happy society we live in.

Bill

Ohio Rod Builders

Canton, Ohio

Don't really need any. Product liability is the only thing and my agent said it would be worthless since the makers of the blanks I use already carry it. Just his opinion but I haven't heard of any rod builders being sued lately.

I have a rider on my universal security policy, cost is $300 per year. Even if the blank manufacturer's policies would cover any product liability, you will still be named IF a suit occurs. For me, it offers a extra layer of protection. Insurance carriers provide high quality inclusive representation when a sizable amount of their funds are at risk.

I never had it...I have no idea what you would insure to begin with. Regardless of if you had insurance or not, folks could sue you; insurance isn't going to stop them from suing.

Also, what what are the reasonable scenarios that would end up in a trial? I can't think of any. Sure we could all dream up a bunch, but realistically there are probably very very few cases.

Just my .02

Insurance has NEVER been designed to "stop them from suing" ... if anything, it is an attractant. The difference is that without insurance, you are on your own ... with insurance, you sit back and let the carrier defend your honor and their funds.

BTW, I am not saying one way or the other what to do. I have it because I don't want someone else retiring on my money AND it is available to me at a very reasonable price. IMO, the additional annual premium on my insurance bill is an inexpensive way to be 99.99% sure that no one will be reaching into my cookie jar.

If you sell rods in stores, some stores require you have insurance just in case some genius that works for them or shops in their stores breaks a rod and falls on it and decides to go after everyone involved. I would imagine they require that as a way of limiting the amount of exposure they have in the event something happens.

Another thing to consider - and I usually get blasted on this - but if you are a sole proprietor, there is no seperation between you personally and the business. To use Jim's verbiage - the lid is off your cookie jar. Traditional incorporation as a business may allow you to also be listed in any lawsuits against the company (officers are typically listed in litigation) but LLC law in many states provide protection against this.

I'm like Jim... I believe in having some layers there so you're protected. There are also some decent tax benefits with a single member LLC that can pay for several times over past the cost of forming the LLC.

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Ok...I understand your rational Jim and Alex. And sure the extra layer there "can't" hurt; understood too. But really, do you, or any other folks in here KNOW of any custom rod builder being sued, and not "I herd" of a guy being sued?

JIM: If you don't mind, what does your insurance policy cover? Just curious.

My coverage is for general liabiility (public and product). It doesn't cover any employees or facilities. It does allow me to have protection for business inventory and business use of my personal vehicles. It is a minimum limits policy, which in Florida is $1M. What it provides is simple ... defense and indemnification. I do have an ulterior motive - without it, there is a solid risk that my personal umbrella coverage might be compromised IF an event occurred that should have been appropriately covered by a business policy.

Insurance (or lack of) is a completely personal issue. IMO, it is like going (or not) to confession ... risks against it can be difficult to discern AND somewhat unknown until too late. Insurance is intended to be a transfer of risk. You need to decide if you are risk averse and to what extent. Once you know those answers, you can weigh them against the expense of a policy.

To answer another one of your questions ... three individuals come to mind over 20+ years. As to whether any of these folks had proper policies OR were covered, no idea. I do know that there was definitely exposure to litigation and the associated expenses.



Here's the way I see it ...

Option A .... You are a hobbyist, do NOT build for the public. Build rods for yourself, close friends and family members. Do NOT obtain business licenses, tax IDs and other documents to get lower pricing ... buy stuff on sale and buy stuff at ICRBE where everything is a bargain.

Option B ... You are a professional, and you should treat it like any other business. Hang a shingle, obtain licenses, keep immaculate records, do NOT avoid taxes, etc. Get the advice of other business professionals where warranted ... banker, lawyer, accountant, insurance agent. Carry appropriate coverages and incorporate those expenses into your business model.

My annual expense for licenses, insurance, accounting services and basic exposure (website, e-mail and business cards) is about $600 per year ... a whopping $50 per month. IMO, that has got to be one of the lowest cost structures for any legitimate business in the world. To me, it is worthwhile AND comfortable.



Edited 1 time(s). Last edit at 10/10/2010 09:19AM by Jim Gamble.

I just happen to have pulled a few of my old Rod Maker mags.

Vol. 2 number - 4. Is on this subject. after reading this and some info which was e-mailed to me, I think I would rather be insured.

Bill

Ohio Rod Builders

Canton, Ohio

JIM:

It's hard to argue your point and thanks for illustrating it well. I do agree, it is a personal choice and everone's situation will be different.

But for the small amount of $$ that you pay, I would think that it could be of some benefit; especially when needed. Personnaly, I believe the probability of being sued is slim to none at best.

But...you convinced me to get it if I reopen the doors.

Thanks much...
Paul

Paul Rotkis Wrote:
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> But for the small amount of $$ that you pay, I
> would think that it could be of some benefit;
> especially when needed. Personnaly, I believe the
> probability of being sued is slim to none at
> best.

The sad part ... hopefully, you will NEVER get your money's worth. You are correct that the odds are in the carrier's favor, that's the whole idea. However, liability coverage is an option AND it is one that should be taken into account when making the decision to take this craft to the business level.