Shop Coverage. Insuarnce

[larry merlau]

i have a question how do we cover the shops against catastrfy,, i had an insurance person out last night and the first question they asked was if it was for business use, if it was then nothing,( the rest of the garge holds my vehicles), this garge is not attached to the house. would be coverd and that it would be determned by the adjuster.. so how do you the rest oy you folks cover your shops against loss? thanks for your help

[Mike Weaver]

Larry,
My shop is in my basement and is strictly a hobby for me. As such, homeowners covers it.

When I asked my insurance agent similar questions, his comments mirrored yours - if it's a business, then nothing is covered by homeowners.

Cheers,
-Mike

[Frank Pellow]

Same thing for me; my group homeowner's insurance policy covers the shop (in my case, a seperate building).

I was strongly advised to create an inventory with serial numbers and replacement costs -which I did.

[Jim Becker]

In most cases, homeowners insurance will cover your shop as long as it's strictly a hobby, but you need to check the actual coverage and limits, especially if you have stocked your shop chock-full of more high-end stuff. You may find a need to raise the limit for personal property on some policies. Frank's advice to keep an inventory, which should also include pictures...and even better a video that shows things in place...is an important point to take. The bottom line is that all policies are different and it's very critical that you understand what your coverage actually is. Our policy is a MasterPiece from Chubb and it extraordinarily comprehensive; ones I've had in the past, while really good, were not as good in many ways.

[Mike Wilkins]

Had to chime in here since I am an insurance claims adjuster for a major company. In most states the contents portion of your homeowners policy will cover your personal property for any sudden accidental loss; as long as it is not used for business purposes(you do not make this your source of income).
Since the burden of proof is on the person making a claim, it would be in your best interest to list, catalog, photo/video and document your shop inventory.
Adjusters love this kind of documentation since it makes our job easier.
And do not keep this inventory listing and info in your shop, just in case it is destroyed by a crashing UFO. In trying to remember everything that is in your shop during a major loss, you will forget something for sure.
Be safe and watch those fingers.

[Donnie Raines]

Had to chime in here since I am an insurance claims adjuster for a major company. In most states the contents portion of your homeowners policy will cover your personal property for any sudden accidental loss; as long as it is not used for business purposes(you do not make this your source of income).
Since the burden of proof is on the person making a claim, it would be in your best interest to list, catalog, photo/video and document your shop inventory.
Adjusters love this kind of documentation since it makes our job easier.
And do not keep this inventory listing and info in your shop, just in case it is destroyed by a crashing UFO. In trying to remember everything that is in your shop during a major loss, you will forget something for sure.
Be safe and watch those fingers.


I thought there was a " no UFO covergage clause" written in to most polices these days.... :rolleyes: (I'm in the insurance biz too)

[Scott Coffelt]

Let me say I have personal experience with this and it ain't pretty so if you have a weak tummy look away.

Several years ago, way before I ever thought of actually making money at this stuff, I was helping a friend out finishing his house. In return he provided me dinners at the site and in the end a thank you of a new tool.

Anyways, one night I had all of my tools that would be used for finish carpentry and then some in rubber made containers and in the back of my truck. When I got home, I live in a decent part of town too, my garage had something in it so I though I would leave the truck out front. I took everything in out and put in the garage, I left most of the stuff in the extended cab.... well someone must have seen me somewhere. That night I had a break in and they stole about $3k (replacement value) worth of stuff.

The insurance was called, about three weeks later after about 6 interviews with them I get a call saying they would not replace cause I ran a business. Mind you I had never ben paid more than the cost of materials and an occasional meal from anything I had done.... and meals being a fastfood one at that. I had made a statement I was helping a buddy on his house build. They assumed that because I had names like Dewalt, Porter Cable, Makita, Starret, etc. I must be a carpentry and in business. No matter what I did, even hiring a lawyer didn't help me as they had it in their mind that I was running a business, they had more money and could fight me till I had none... I finally cut my losses and switch all my insurance to another.... an to this day tell people not to use Kansas Farm Bureau for insurance. In some small ways I know they eventually have lost more business than the $3k, but I am still out.

So when in doubt double check with your insurance agent and get in writing what is covered and how. I value my shop around $18-20K these days and that doesn't take much to do with good tools.

[larry merlau]

well scott i agree that the insurances of today are trying to cover themselves too. so i had already planned on gettin the inventory and pics like jim and others mentioned but here is another catch that you made me think about.. i am a licenced builder and even though that isnt where i am supporting my household from, if there were a claim and they found that info out would i instantly be in your boat? this can be directed to the adjuster that replied.. i dont need to take it in the kester if i can get it right ahead of time.

[Doug Shepard]

Read the small print on your policy VERY carefully. Apparently the insurance companies don't think anyone actually reads that stuff, so you're not always getting what the agent promised. As an ex-working musician, I used to get a policy to cover my tools (guitars, amps, etc). Even when I specifically told them I was a self-employed working musician two places wrote me up for policies, that when I got the policy in the mail had problems with them. They won't make it easy for you to determine what's not covered, but bury it in boiler plate contract clause legalese. Neither of these actually said "your not covered for business use" or anything else approximating common English. The phrase I remember was something like "coverage excluded if the items are used for remuneration". I'm a reasonably intelligent person, but didn't have a clue what remuneration was so I looked it up. Turns out remuneration=pay. So I called back to the agents and either got them to cancel the policy and refund my money, or get an addendum letter stating that those specific clauses of the policy don't apply.

[Steve Nelson]

Being an Agent myself, I dont promise what isnt there and I suspect that most agents dont either, that being said I always counsel my customers to read the policy (including fine print) and if theres anything they dont understand, call me thats my job...

[Vaughn McMillan]

I can't offere any additional advice regarding shop insurance that hasn't already been given, but similar to Scott's story, and in line with Doug's...

Years ago, as a working musician, I had a pair of very nice electric guitars stolen from my van after a gig. (Shoulda never stopped at Denny's that night.) I called my auto insurance agent the next morning, and was told no problem, we'll cover the loss and have a check to you in a few days. A few days pass, and I called the agent to inquire about the status of the check. I casually mentioned that I needed the insurance money to buy a replacement guitar, since I depended on the stolen guitars for my income. [Insert sound of screeching halt here.] After a few moments of stammering, my agent informed me that, since the guitars were used for business purposes, they were not covered, and I was out of luck. After that experience, I made sure my insurance covered my equipment, even when used for business purposes.

(Doug, I lost a '67 Les Paul Custom and a '77 ES-335. Both were replaced with one of Bernard Rico's hand-made BC Rich Mockingbird prototypes...built before that model went into production. That was about 25 years ago, and I still have the Mockingbird.)

Sorry for the threadjack -

- Vaughn

[Doug Shepard]

Being an Agent myself, I dont promise what isnt there and I suspect that most agents dont either, that being said I always counsel my customers to read the policy (including fine print) and if theres anything they dont understand, call me thats my job...

Steve
I wasn't slamming the agents. In both cases they seemed genuinely surprised at the policy clauses when I received it in the mail, as they were selling me a policy specifically aimed at business use. Both were small independant agents selling policies for other insurers. The first one wasn't able (or didn't know how?) to get the insurer to issue a policy revision to delete the offending clauses and refunded my money without any issue. The second one promptly got the insurer to issue an addendum so that I was covered. My only point was, there's a lot of small print and even agents selling in good faith don't always seem to be aware of what's in there. Not discovering it until you've got a loss claim could be real painful.

[Corey Hallagan]

Well you have heard from an agent and an adjuster, how about an underwriter? Been years since I underwrote homeowners insurance. As others have said get your inventory written down, photographed, video, serial numbers etc. And don't keep it at home or your shop, keep it in a safe deposit box. It won't do you any good if it is buried in burning rubble etc. It's the exclusions on your policy that should be of interest to you.

Larry, just because you are a licensed builder is no reason for anyone to decline a claim and don't have any idea what happened in Scotts case. However if you were to operate any business pusuits our of your shop, do any contractor business etc. you definitely would have a problem. In both property and liability sense. Remember guys, if your giving any kind of bids, receipts etc. you got potential problems!

Corey

[Roy Wall]

I can't offere any additional advice regarding shop insurance that hasn't already been given, but similar to Scott's story, and in line with Doug's...

Years ago, as a working musician, I had a pair of very nice electric guitars stolen from my van after a gig. (Shoulda never stopped at Denny's that night.) I called my auto insurance agent the next morning, and was told no problem, we'll cover the loss and have a check to you in a few days. A few days pass, and I called the agent to inquire about the status of the check. I casually mentioned that I needed the insurance money to buy a replacement guitar, since I depended on the stolen guitars for my income. [Insert sound of screeching halt here.] After a few moments of stammering, my agent informed me that, since the guitars were used for business purposes, they were not covered, and I was out of luck. After that experience, I made sure my insurance covered my equipment, even when used for business purposes.

(Doug, I lost a '67 Les Paul Custom and a '77 ES-335. Both were replaced with one of Bernard Rico's hand-made BC Rich Mockingbird prototypes...built before that model went into production. That was about 25 years ago, and I still have the Mockingbird.)

Sorry for the threadjack -

- Vaughn

So even after a few days they hadn't mailed or even processed the claim like they said they would - huh!!!

[Perry Schmidt]

Even if you are 'just a hobbiest', read the fine print. A few years back our insurance company changed the 'normal policy' (from a major company...) and put limits on the dollar amount that it would cover of garage contents for theft. I have a garage shop, and although I didn't hit the limit, but I was close. And I don't have nearly the inventory of tools a lot of people here do. Check the fine print.

FYI -

Perry

[John Lannon]

i have a question how do we cover the shops against catastrfy,, i had an insurance person out last night and the first question they asked was if it was for business use, if it was then nothing,( the rest of the garge holds my vehicles), this garge is not attached to the house. would be coverd and that it would be determned by the adjuster.. so how do you the rest oy you folks cover your shops against loss? thanks for your help

I recently took my digital camera and made a complete tour of the house, snapping pictures of everything of value. I then put them on 3 different CD's. I mailed the 2nd CD to my daughter, and the 1st one is kept in a fire proof safe, and the 3rd is kept by my insurance guy. I also made a replacement value sheet for all the items on the CD's.