Home owner's insurance for a knife maker???

NickWheeler

NickWheeler

Joined
Dec 3, 1999
Messages
9,437
So as I'm approaching closing on the new house/shop I have to get an official number for homeowner's insurance to the mortgage company. Initially I just had to get a "rough quote" and every insurance outfit was happy to help me.

Now that I'm getting into the nitty gritty of the house, shop, and that I'll be working in it... nobody wants to cover me. I have used "custom metal work and fabrication...i.e. machining and welding" as the base description because that's more mainstream and easier for most folks to comprehend... But still they say they can't help me.

I do NOT want to be dishonest... I want to be clear about everything so that in the case that I actually need to file a claim, the insurance agent isn't going to say, "Um, you never told us this, you're not covered!!!"

I feel like some of the agents are misunderstanding me, thinking that I will have a storefront with customers coming in and out---despite me specifically saying that will NOT be the case.

So what the heck does a guy have to do to get homeowner's insurance on his house, shop, and tools as a knife maker?!?!?!? :confused:
 
I was told it would not work by Many agents and Insurance company's alike. I will be in the same spot within a year or two so if there is a answer to this problem I would like to hear it to.
 
You need your own commercial liability policy with extra insurance for your tools and equipment and an inland marine policy for your knives when you are at shows or consignment somewhere for sale. Your HO dwelling coverage may extend to your shop. Your business tools/liablity are not covered under your HO policy. Make sure and ask your insurance agent. Good luck!!


Edit, tell them you have a business in your home and you have NO retail space inside your home for retail sales.
 
I’ve never gotten an insurance company to cover what they call tradesman’s tools. I expect they’ve figured out that replacing such tools is excessively expensive. If there is some special policy for a shop full of construction tools, no insurance agent ever told me about it.
 
Raymond1000 said:
I’ve never gotten an insurance company to cover what they call tradesman’s tools. I expect they’ve figured out that replacing such tools is excessively expensive. If there is some special policy for a shop full of construction tools, no insurance agent ever told me about it.
Click to expand...

It's important for everyone to remember that insurance rules and regulations vary by state so the best thing to do is talk to your agent to make sure you know what your policies cover.

Raymond you're right that a homeowners policy probably won't cover a shop full of specialty tools, but if you have a shop you could get a commercial policy to cover at least some of the tools and equipment you use. Basically you'd need to know more or less how much they're valued at. There are many options for commercial policies but I imagine if you found an agent who specializes in commercial insurance you could get a policy to cover your shop and tools.

The other issue is that not all insurance companies will cover all types of businesses. This is referred to as "commercial appetite". Some companies have no "appetite" or desire for certain types of businesses so either they're less likely to offer coverage for them or won't offer coverage at all.
 
Yeah, what cosmophonic said. You need a standard homeowner's policy, then additional liability insurance for your business. That is how I handled it in another (but similar) situation. People who insure homeowner's policies generally do not do the business stuff. So different policies. State Farm can do both.
 
Every state is different. For my business I have a liability policy. For my home and shop I have a standard policy with a million dollar umbrella rider that covers everything in my shop and all my equipment on the farm.

Liability alone does not cover your equipment it only protects you if someone gets hurt in your shop.
 
Last edited:
Nick, it definitely pays to be honest and also understand what a policy covers. If something happens to your equipment and you try to file a claim it's highly likely you'll find out that your tools are not covered under your homeowners policy. Also it's not so much a case of not telling the agent as it is that the company itself has all kinds of rules about what policies cover and how claims are handled. So not telling the agent wouldn't be the problem. The issue would really be more along the lines of the company simply doesn't offer coverage for that equipment and your agent would wonder why you didn't ask about it so s/he could tell you how to go about getting coverage, if at all possible.
 
S R Floyd said:
Every state is different. For my business I have a liability policy. For my home and shop I have a standard policy with a million dollar umbrella rider that covers everything in my shop and all my equipment on the farm.

Liability alone does not cover your equipment it only protects you if someone gets hurt in your shop.
Click to expand...

You're right that liability does not cover equipment. I'm surprised your umbrella rider offers coverage for property, though. I'm fairly certain they cover only liability.
 
NickWheeler said:
I do NOT want to be dishonest... I want to be clear about everything so that in the case that I actually need to file a claim, the insurance agent isn't going to say, "Um, you never told us this, you're not covered!!!"

I feel like some of the agents are misunderstanding me, thinking that I will have a storefront with customers coming in and out---despite me specifically saying that will NOT be the case.

So what the heck does a guy have to do to get homeowner's insurance on his house, shop, and tools as a knife maker?!?!?!? :confused:
Click to expand...

You don't want to lie, but I think they will make you use the shade of gray to use the truth ! I am not sure what state you are in but some are real sticklers about chemicals and fire on the premises.
So I kind of look at as they are on a need to know basis! Some insurance companies if you mention those two items will flat refuse to insure you. Because you have crossed a line into a commercial bussiness.

I would make sure they know I have tools in my shop and the tools and the shop need to be covered. I am not conducting a business per say on the property just doing occasional fabricating/metalwork in my shop. And from there I would let sleeping dogs lay or is it lie!:eek: Be sure to read all disclaimer attached to your insurance coverage, especially any that might designate your shop as a bussiness. Homes and shops/garages burn down all the time. A lot of times it is due to owner negligence, but that doesn't mean that they are not covered,no most of the time they will be covered unless it is specifially spelled out by the insurance policy.

I know what you mean it puts you in a very bad situation when you want to be tottaly honest and still be covered without out sacrificing an arm, a leg as well as the first born virgin to the family just to pay for insurance. But shops on the same property as residential cross into that grayer area of the law!

You say to.mat .o, I say to.mato !:D:D
 
Last edited:
In Texas I used Germania because they covered farmers, and the workshops needed by the farmers. I never had to use the policy before I moved so I don't know if they would cover it or not.
 
Fanglekai said:
You're right that liability does not cover equipment. I'm surprised your umbrella rider offers coverage for property, though. I'm fairly certain they cover only liability.
Click to expand...


That’s why they call it an umbrella, its covers both your home and auto. An umbrella is an excess liability policy. It’s a secondary liability. Auto & HO liability is primary in AZ, then umbrella kicks in for the rest up to the limits.
 
cosmophonic12 said:
That’s why they call it an umbrella, its covers both your home and auto. An umbrella is an excess liability policy. It’s a secondary liability. Auto & HO liability is primary in AZ, then umbrella kicks in for the rest up to the limits.
Click to expand...

Oh I know it's for liability. I work in insurance so I'm familiar with umbrella policies. What I found confusing was that it sounded like he thought his umbrella policy offered coverage for property replacement, which it doesn't. I must have misinterpreted that post.
 
I think some folks need to talk to an agent and understand the different types of policies. Liability coverage is not the same as loss coverage. Business is business, regardless of where you do the transactions. If you have a shop on your property, and you sell the products you make there ,or use the same tools in your regular work line, you will need a separate business policy or rider.

I realize that some see it as gray, but if you have a loss, and the insurance claim is denied...and you get cancelled....you will be seeing red. Black and white is exactly that, not a mix of the two.

Talking to a commercial agent can be the best route to go. He/she can sell you coverage that is homeowners and coverage that is business, and make a package of them.
 
You should probably talk to your county clerk or city board too... there can sometimes be touchy zoning issues about "manufacturing" in a residential area or even running a home business.
 
james terrio said:
You should probably talk to your county clerk or city board too... there can sometimes be touchy zoning issues about "manufacturing" in a residential area or even running a home business.
Click to expand...

You can get past some of the zoning issues by referring to your shop as an "art studio"... Metal art that is sharp is the best art IMHO! :cool:
 
Nick
check with "Ray Richard" he had insurance at least help him when the "Barn"/ Shop" burned down a couple of years ago ..
he can most likely tell ya who he was insured with and if it was "Worth" the trouble ..that is all i got for ya Good luck .
 
A lot of makers have farms and the insurance for a farm is a type of business insurance. Raymond was one of those.

Homeowners insurance is for a persons house, other buildings on the lot, and the contents of these. It only covers personal property.
If you use the contents or property in any type of work,it isn't Personal Property or a residence anymore, it is considered business property and a business location ( by the insurance company). It doesn't matter if the tools are your "personal property" ( you own them), and if you aren't engaged in commerce where they are kept/used.

If you are a hobby maker, and don't sell more than a few knives a year, then you might be correct with calling the shop a hobby studio. But, if you sell often, even if you have another full time job, the insurance underwriters will classify you as a business. If you have a web site with knives for sale, do knife shows, makermark the blades "J.D.Knives", or have a business license that covers whatever it is you will make in the building ( even if it is for another location), pay taxes on money earned from selling knives,..... they will call your shop a business, and the contents business property.

You might get away leaving a few details out of the conversation with the agent, and having your home owners policy cover your new studio, but if there is a claim and the investigating agent determines that the insurance was the wrong type, you may get coverage for the building only, or nothing at all.

Other issues to consider when trying to avoid future problems are ( counties and rural areas are easier than cities):
Fire codes - often they don't allow more than one pound of propane inside a building. The tank needs to be outside, and none are allowed to be stored in the building. Extinguishers and fire suppression systems may be required.
Building and Zoning codes- some municipalities will not allow any business to be run from a residence.Some won't even allow a building that is not a residence or adjacent structure ( garage ,etc.) to be built in residential areas. It takes a permit from the zoning commission to do such. A painter, sculptor, sheathmaker, or wood carver will have no problem, a smith may have to explain his craft....anyone with customers will have to assure the commission that all business is conducted elsewhere ( online, by mail, and at shows).
Noise ordinances often are a concern. If the new shop is considered a hobby studio - great, but spending a grand more on double walls and insulation can be a smart idea. Such ordinances often cover the hours you are allowed to pursue your "hobby".
Odors from coal fires are not allowed in many cities. (London and Edinburgh used to be foggy, smelly, and dirty until coal fires were banned). Air quality ordinances are increasing in many places that have smog and similar air problems.
Deliver and mail pickup trucks coming too often.
The stacks of "future handle and blade material" sitting around the outside of the shop may be valuable objects to you, but may be considered junk and improperly stacked firewood to the city.
Wetlands issues may need to be checked if there is a ditch or creek nearby.
Business licenses, local fees ( trash collection and other city provided things are different if you are a business),state taxes, etc.

I am not saying you can't build a super-dooper shop, and work on your passion at home....just to do it right and thus not have to worry.
A side benefit of having to plan for all these things is that you will likely build a better and safer shop because you designed for them. Having dealt with all this in the planning and ( almost ready to start construction) designing of my new shop, I can attest that the shop has features and safety that I might not have done otherwise.
 
My wife has homeowners insurance on the house, I have a commercial policy for my business with another agent that covers me for theft, fire etc. and a 1 million dollar liability per incident 2 million agregate, it costs me somewhere around $400 per year. I was absolutely truthful with my commercial insurance agent about what I do, even that I make fencing swords (yes I make swords that people hit each other with, since I do not make the actual blades for those, he didn't see it as an additional liability concern)

-Page
 
bladsmth said:
A side benefit of having to plan for all these things is that you will likely build a better and safer shop because you designed for them.

Having dealt with all this in the planning and ( almost ready to start construction) designing of my new shop,

I can attest that the shop has features and safety that I might not have done otherwise.
Click to expand...

What kinds of features ?
 
You must log in or register to reply here.
Back
Top