What do most knife makers do about home insurance?

LARRYZ10

LARRYZ10

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Feb 6, 2010
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I make one of a kind sporting knives and only a few kitchen knives and I only sell about a dozen knives per year. I could sell more but I don't want to be a slave to my knife making. One of my friends recently asked me how much extra I pay for homeowners insurance because I work out of my garage. I hadn't thought about it. He said if I ever had a loss that my insurance would be void because I sold some of the knives I make. Should I buy special commercial insurance for my home and is it expensive? What do you guys know about this? Thanks, Larry
 
They are right Larry and you should inquire more with your insurance company. It is fine as long as it is a hobby. It is a hobby if you don't make money for it, well that's one way they define it over here. Works in my case cause I spend way more than I make. Just be careful when you inquire cause after hearing from other knifemakers, they have no idea how to deal with a knifemaker's shop and that causes all kind of problems. A search for insurance on here should give you more info. Good luck.
 
Hi Larry, I had a shop fire 2.5 years ago and the shop was a total loss. At first Allstate whom held my home owners insurance said it would be no problem and that every thing was covered by the HOI as it was a hobby which it was at that time. I did how ever sell a far amount of fossil ivory out which was stored in the shop. This is what killed me. They did a search on the net to see if I was selling any of my work online which I had not but I had sold some fossil ivory here and on other forums. So because of this they denied paying the claim.If I had the ivory stored in the shop all would have been fine. It was a crappy way for them to find a way out of paying what I believed they should have paid. That said you need to have a commercial policy and I would not just tell them you make knives. I would say you are artisan and make cutlery.

Brett
 
Bret, I am sorry about your loss, buy not giving the correct info is bad advice. As far as insurance goes, if you make and sell knives, you need to say so.

As a GENERAL rule:

If it is a hobby, it doesn't void your insurance.
If you sell a few items to pay some hobby expenses, it isn't a business.
If you sell a dollar amount that would be considered "income" by most folks, it may be considered a business ( even if it does not make a profit).
If you have a separate bank account, take credit cards, have a website, sell on eBay, sell in a "sales forum", take paypal payments, etc.......you will likely be considered a business.
In many cases, even if the policy is still valid for your house and contents, it will not cover your tools.
If you have a forge or HT oven in a garage, it may be a problem. Putting them on rolling carts or in an outside work shed may solve that problem.
In almost all cities, and many other localities, a propane tank can NOT be inside a building...even a garage. In some places, they have to be 20 feet away. Check this out, as it may be a bigger problem than the insurance policy.

Call your agent and make an appointment. Don't discuss this over the phone...do it face to face.
Be honest with him/her. Tell them exactly what you do as a hobby, and how much you spend on supplies vs the amount you make on the dew sales you have. Make it clear that this is a hobby if that is what it is. Also, make a list of your tools (and materials if some are expensive) and put values on them. Give this to the agent and ask if you need to increase your coverage, or have a rider policy.

If you are truly a hobby maker, in most cases the agent will note these things in your file and tell you that all is fine. In some cases he/she will send the info tom the underwriter for clarification.

If you really have a knife business, be a mensch and get a license, tax ID#, and business insurance. Sometimes that makes people go back to hobby making, and other times it makes them take their business seriously and work to increase sales.

Don't take the above info as the answer for any person's individual case. Location and specifics may change many things. TALK TO YOUR AGENT!
 
Everything Stacy said is true, but especially this:

Stacy E. Apelt - Bladesmith said:
Don't take the above info as the answer for any person's individual case. Location and specifics may change many things. TALK TO YOUR AGENT!
Click to expand...

I would add, talk to MANY agents, not just the one you already have.

The regulations involved vary widely from state-to-state (even county-to-county and city-to-city, and even by neighborhood in many cases) and between companies and policies. Whether you're selling knives for a living or just making birdhouses in your spare time. We're dealing with everything from zoning ordinances to tax laws to mind-bending "insurance" contracts that are specifically designed to confuse you and rip you off. (newsflash... insurance companies don't make money by paying claims ;) )

It's a huge PITA to navigate, and there's no easy answer to any of it.

You're just going to have to deal with it locally...
 
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Good advise given. The only thing I can add is that it may help to talk to several other companies about your specific setup before you talk to YOUR insurance company. This will could give you insight in how to present this to your company and give options if your company doesn't want to cover you.
 
Stacy, Your advice on almost every knifemaking subject has been golden to me and I think you are probably 100% right about this. I am calling my insurance company on Monday morning and hope to get an endorsement added to my policy or a letter stating my coverage. I bought Travelers insurance over the phone and my "agent" is an office in Tennessee. I had a water damage claim two years ago and they were great so I want to be honest and pay up or get a different policy. I am too old to buy another house and I spent 40 years working to afford the home I have now. I was sorry to hear about Brent Matthews loss and I appreciate his sharing his story. I HAVE to do this now or I won't be able to sleep nights. Thanks for the tips. Larry
 
This is a 6 year old thread, JW. When pulling up a thread in a search, look at the date of the original post and the last few posts. Necroposting is not usually a good idea. It is usually better to start a new thread and link the old one.
 
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