I have a shop in space I rented a few miles from my home. My agent assures me that my homeowners' policy covers the contents of the shop. I haven't sold anything I've made and don't know if doing so would change the answer.
Thanks -- that's just the kind of information I was looking for. I'm going to set up a meeting with the insurance agent soon and see how I come out.
Before woodworking, I was neck-deep in amateur astronomy, specifically astrophotography. I was able to get a stand-alone policy that covered my $20k+ in equipment for maybe $200/year. Never had to make a claim, but did have to provide them a detailed accounting of the exact items I wanted covered by the policy. And I didn't ask at the time whether I was buying replacement value insurance or not. I don't know if there are similar policies for high-value woodworking tools or not, but will definitely ask about it.
Spoke with an insurance agent yesterday and covered some of your concerns. In Michigan, our outbuildings are usually covers for a percentage of the home's insured value (20% here) .Do the math. In my case increasing the coverage by an additional $20k increased my rates by $5 per year. This is for an unattached building. If attached(by as little as a continuous covered walkway) it becomes part of the home structure and falls under the coverage for the home. Have enough coverage to cover both the home and outbuilding in a severe loss like a tornado.
I don't have an outbuilding, just work out of my garage but did contact my insurance company when I became "legit" and got my tax number a few years ago. My homeowners does cover my tools but they were more concerned with what I was making and selling. Apparently this company did not want me selling baby or children's items. I assume for potential liability issues.
Your topic is a good reminder that I need to re-inventory and double-check my coverages though.
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Mark Patoka
Stafford, VA
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You need to check with your carrier. Most carriers by default will cover you tools, however there are limits. Generally there is a special "tools & jewelry/chash" catagory with a specific amount. In my case I have a great overall policy, but tools fall into a 2k limit. In other words, they will cover full loss up to 2k. I had to add a specfic rider for my guns and tools since they go significantly over that amount. It was cheap. I think I pay around 30$/year for the rider and I'm protected.
Another insurance issue I have wondered about but not pursued is injury liability. I have friends using my shop all the time--mostly with me there sharing my vast knowledge until they tell me to shut up and leave them alone--and maybe should consider my exposure if they are injured. How about a hold harmless document for them to sign before they are allowed to play with my stuff. I just do hobby projects and most that come to "play" have limited experience but are excited to learn about WWing, welding, etc. Any thoughts??
You should have a liability amount specified in your policy. Now if you are conduction a business then that gets into another area. I bought some land and found out I'd better add some coverage (which is covered under my main residence policy), in case some tree hugger is trespassing on my prop and a tree falls on them. Not lying! It was covered under my main residence policy as long as I called it out and had the address added to my policy declarations. However it's part of your total liablity. In my case thats a 300k/occurance max. I've since bought an umbrella policy that sits on top of my regular policy limits and kicks in at the point my max is reached. Believe it or not, that's cheaper than buying a large policy. go figure.
Glen, my name is Alan and I am an insurance agent. I'm fairly thick skinned, but I see customers like you come in and ask for my help every so often. They make it clear they don't trust me, and think I'm out to screw em'. I politely ask them to go somewhere else for insurance. Life is too short...... and it's been my experience that insurance carriers are generally very fair, while many in the general public feel totally justified lying to insurance agents and carriers. People who consider themselves completely honest will inflate estimates, claim items for loss that never existed. And when asking about smoking habits for life insurance, or how far is your commute to work, people flat out lie. It never ceases to amaze me. I typically spend my day answering customer questions, and if a customer's buys a policy it's because he needs it, not because I want to sell something.
As far as the original post is concerned, the answer is "it depends on your policy" If you sell stuff, you likely need another type policy. It your commercial work is limited, a policy can be very reasonable. In any case, you want replacement cost. If you have low liability limits, get a quote to raise it to at least $500k. If you have questions call your agent. If they try to sell you coverage you don't want, don't buy it. Don't complain when you have a loss if you decide not to buy the right coverage.
Go in your shop and take a thousand pictures of all your stuff. Open drawers and take pics. Open cupboards and take pics. Then go upstairs and take another 1000 pics. Put the pics on a stick drive and store it somewhere outside your home. Give it to you mother. Give it to you best friend. Bring it to work..... repeat once a year. The whole process takes about an hour.
Thanks for the insights, Alan. The problem I and many others have is that, if you know next to nothing about insurance (like most of us), it's impossible to differentiate between an agent trying to sell you something you don't need just to add to his revenue stream and an agent who's truly looking out for your best interest and wants you to have the coverage that really is best for you.
A healthy skepticism (or mistrust, if you want to call it that) is good - assume going in that a guy who deals in widgets is primarily interested in selling you some more widgets and you might keep yourself from spending unnecessarily.
This thread has most definitely been helpful, as I pointed out before - the need for replacement value insurance is something a lot of folks might not know to ask. Liability limits are another area to ask about.
As a victim of an insurance agent's ignorance, not listening to your insurance agent is a pretty good idea. Read your own policy. Read the legal definitions.
Depends on where you live (insurance regulations are at the state level) and your particular policy. It's always best to ask your agent for specifics about what your policy will cover. Folks who have "pro level" machinery may need to "do the dance" as there may be a perception of business even if it's purely a hobby, too.
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The most expensive tool is the one you buy "cheaply" and often...