Insurance question.

W

wizzer

Joined
Jun 23, 2016
Messages
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I am looking to sell some knives I have been making as a way to not accumulate too many of the same kind and pay for the hobby. I am making them in the machine shop where I work full time. My biggest concern is making sure there is no liability passed on to the shop owners. The second is making sure I'm not liable when someone cuts themselves with a knife I made. I plan to sell to anyone who wants them, not just friends and family.


I have considered making an LLC which I believe would hold all of the liability. Is this Correct? What insurance do you have in place to protect yourself?

Thanks,
Yoke
 
Like all things legally related, I would advise you to consult an attorney in your area, and ask them that exact question--having said that, I believe that an LLC does just that. LLC stands for Limited Liability Company, often times in business an LLC is formed specifically to have an entity to hold responsibility for what it does independently--Now what that should mean is that your LLC for knifemaking would be the responsible entity for liability issues concerning knives that you produce--one key is that you need to make the LLC a real business--meaning that you track expenses and income, and all of your equipment purchases etc. In the end what this means is that if a party pursued a legal action against you for a liability issue arising from your knives or knifemaking the limit of what they could recover is all the cash and equipment on hand owned by the LLC.

I have a lot of experience in forming multiple companies within the companies I worked for specifically to dilute the values of recoverable assets if indeed on of our LLC's came under a losing lawsuit.
As I stated right off the bat, one should always consult an attorney from their area and get their view on the matter. Forming an LLC is pretty simple nowadays, you just go to the State you are in website, and follow the links to forming one.

Good Luck with your pursuits!
 
To protect machinery or other assets, Your knife manufacturing LLC buys its materials & 'rents' its machinery & workshop from your Machinery Rental & knife supplies LLC.

While its a lot of shuffling money between pockets of the same trousers & paperwork to match, helps keep assets safe.
In the mean time, you can actually make & sell a product.
 
need to check your local and state laws. here in north carolina, you go down to the clerks office, pay $20, and you are a sole proprietor business that can do anything except sell food, booze, and cut hair. North Carolina has a due diligence law which basically means you can't sue me because I sold you a sharp knife and you cut yourself.
check with you local community college. the ones here have small business advisors who teach small business classes and seminars and will also do one-on-one consults.
scott
 
If you do a search, you'll find previous discussions of this topic.

The good news is that there is very little precedence for 'I cut myself' lawsuits.

The bad news is that insurance protection and LLC structures do not prevent lawsuits; they are simply factors that help improve your chances of fending off the suit. If you were to be sued, the suit would be directed at you personally AND your LLC (and possibly other parties).

The insurance issue seems to vary heavily by state. Some knifemakers seem to have no problem getting a general liability policy. Insurers have told me I can't have general liability without product liability, and no insurer has been willing to quote a price for product liability.
 
I have been battling with this for almost 10 years, now... Insurance is a crock. "Try" to insure your home or shop in case of fire and let the chips fall where they may. NO insurance policy, liability clause or other such fine print will deflect a lawsuit completely. I also believe that there is a lot of fear mongering going on when it comes to insurance. It is usually the new guys who are the most worried about insurance and liability. The veterans realize that the cost and hassle of it outweighs the benefit... which is often times a false sense of security.

Yes... I am bitter. You get that way when you try to do everything by the book and get nothing but trouble from folks who are ignorant about your business. You will find barriers in every aspect of this industry. Stay strong, do want you want to do and be damned with those who say you can't. They aren't your target market, anyway... Ha!
 
Thanks for the input everyone.

I am going to start an LLC to put a little distance between the manufacturing facility / personal assets and the products I sell.

I also plan on having very little money for the rest of my life so that shouldn't be a problem ;)
 
Indemnification Agreements can be your friend.
(Make it like a EULA on your payment page :-)
 
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