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754
05-11-2017, 05:36 PM
I thought I should bring this up.

A buddy of mine has a basement shop, had a fire in his house. It did not start in the shop area. A lot of the damage was smoke and water damage, a lot of tools needed cleaning or replacing.
At the start of the claim, first thing they asked..Did you Do Work for Pay ? Luckily he did not, as he had a day job. They asked several times.
The gist of it is, had he been it would have greatly affected his coverage of his extensive tools and equipment.
Just a warning as it can be along and onerous process.
You have to decide where you want to be on this.. A restoration rooting thru your stuff and mixing it up and tossing things you need is never any fun.
He actually struck a deal to clean his own equipment rather than have them wreck it some more.
And if you are accumulating stuff , try to keep inventory... And before it gets said, yeah I am guilty of not always following my own advice..
But hope this will help someone else..

ncjeeper
05-11-2017, 06:29 PM
Why should it matter what you do with your tools? If they are covered under the policy then they should pay up. Was there an exclusion in his policy that he can only use his tools for hobby purposes?

SteveF
05-11-2017, 07:23 PM
Because if you are getting paid for the work you are operating a business, and the tools are part of the business, and you need to be covered under a commercial insurance policy, not your homeowner's policy.

But you are correct, people need to actually read their insurance policies and not just assume everything is covered for full replacement value for any possible loss situation just because "they have insurance".

Steve

RB211
05-11-2017, 08:56 PM
Good way to ruin a fun hobby


Sent from my iPhone using Tapatalk

boslab
05-12-2017, 12:25 AM
Yes I found out what happens when they get stolen too, your insurance company use the multiplicity of small print to screw you, aka they refuse to pay, oh the building was not properly secured with a European standard lock, the alarm was inadequate, blah blah, boils down to it was your fault, even house contents, if you say there was an alarm then the thing has to be installed by a company they recognise, then maintained by the same with an annual service, really they go the extra mile to take money off you and not pay out on claims, I'm beggining to think insurance for contents is a waste of money, just put the same as the premium in an account to cover yourself, I paid mine religiously for 30 years without claim, when I did need them I got a single 1000 payment, and only after complaining to the insurance regulators.
Moral is, read the small print, it's suprising how many ways they can wriggle out of paying.
Insure your tools separately, list every item, Mark every item, photograph every item, keep receipts for every item, inform them of items over the item limit in the small print (it's there, trust me, if it isn't ask them, they must provide it)
Mark

pinstripe
05-12-2017, 01:12 AM
It's a similar deal here with most (all?) insurance companies. My policy covers up to a few thousand dollars for "tools of trade", i.e. tools that are used, or were used to generate an income. Tools used for a hobby can be claimed up to the value of the policy. As Mark says, read the fine-print. It's not exciting reading, but there are lots of loopholes you should be aware of.

Also, generally speaking, you get what you pay for with insurance. If Policy A is cheaper than Policy B, then there are probably more exclusions in Policy A. There are no bargains. Cheap insurance comes from the same companies that sell expensive insurance, even if there is a different company name at the top. Shop around by all means, but don't assume that they all cover the same things.

MattiJ
05-12-2017, 01:12 AM
I thought I should bring this up.

A buddy of mine has a basement shop, had a fire in his house. It did not start in the shop area. A lot of the damage was smoke and water damage, a lot of tools needed cleaning or replacing.
At the start of the claim, first thing they asked..Did you Do Work for Pay ? Luckily he did not, as he had a day job. They asked several times.
The gist of it is, had he been it would have greatly affected his coverage of his extensive tools and equipment.
Just a warning as it can be along and onerous process.
You have to decide where you want to be on this.. A restoration rooting thru your stuff and mixing it up and tossing things you need is never any fun.
He actually struck a deal to clean his own equipment rather than have them wreck it some more.
And if you are accumulating stuff , try to keep inventory... And before it gets said, yeah I am guilty of not always following my own advice..
But hope this will help someone else..
Luckily for you buddy the fire didn't start in the shop area.
At least here the insurance company "small print" requirements are so tight that its just not possible to use angle grinder or welding machine in average garage or home shop. You probably still need to clear the perimeter within 500 feet of anything combustible, prepare 2 pcs of huge fire extinguishers and have 2 hour fire watch even if you are welding 2 pieces of rebar in 3 feet deep snow in the middle of siberia.

DATo
05-12-2017, 03:28 AM
In the U.S.A. most insurance companies require a "rider policy" for home possession of unusually valuable stuff like guns, jewelry, or tools beyond a practical limit. These policy "riders", as they are called, are not extraordinarily expensive to attach to your policy. Despite my loathing of the practices of most insurance companies I must grudgingly agree that this is fair.

Insurance prices are based upon an average estimate of what the average homeowner would possess. Clearly the "average" homeowner would not posses $20,000 - $50,000 (or more) worth of guns, jewelry, or tools so this homeowner would be receiving a far greater amount of coverage for the same cost as his average neighbor who is only being protected for the replacement cost of furniture, clothing, and electrical appliances etc.

Off the top of my head I would think that the far greater concern, (as MattiJ suggested) would be if your shop constituted a business and the effects of a fire which started in the shop burned down your home. This might negate the validity of your homeowner's policy because the shop constituted a greater threat to the home which, once again, the average homeowner's lifestyle did not. My best advice as a home shop owner myself would be to simply come clean with the insurance company at the outset and do things by the book where they are concerned to obviate any problems which may occur later as a result of the fine print in your policy.

pinstripe
05-12-2017, 04:34 AM
Insurance prices are based upon an average estimate of what the average homeowner would possess. Clearly the "average" homeowner would not posses $20,000 - $50,000 (or more) worth of guns, jewelry, or tools so this homeowner would be receiving a far greater amount of coverage for the same cost as his average neighbor who is only being protected for the replacement cost of furniture, clothing, and electrical appliances etc.

So you don't specify the value of the contents when taking out the policy without a rider? Here the policy is for up to a specified amount. Certain valuables like artwork and collections need to be listed if over a specified limit, but the "general contents" don't. You just specify the insured amount, and they charge accordingly.

flylo
05-12-2017, 07:23 AM
You also have liability in case a customer falls, etc. I had a gun shop years ago & would suggest a sub chapter S corp. Court under $500 to set up, create a new entity. Any tools , machines & money you put into the business your self white a promisary note from the business to you & file at the court house, this way some scoundrel tries to sue & causes the Sub S corp to belly up you personlly get paid 1st leaving nothing left for the scoundral & No attorney takes a case with no money. THIS IS NOT LEGAL ADVISE or any lind of advice, Just what I did. Sub S corps tax filings are one page & you transfer 1 line to your 1040, very easy & clean. Sorry for the spelling, the coffee maker quit.

sasquatch
05-12-2017, 07:28 AM
Good post , with food for thought here.

JoeLee
05-12-2017, 08:20 AM
Why should it matter what you do with your tools? If they are covered under the policy then they should pay up. Was there an exclusion in his policy that he can only use his tools for hobby purposes? Insurance companies have all kinds of hidden clauses so they can screw you when it comes time to pay out.

JL.............

softtail
05-12-2017, 09:22 AM
Insurance companies have all kinds of hidden clauses so they can screw you when it comes time to pay out.

JL.............

Zoning being another. If you are in a residential 'hood and getting paid for odd jobs in your garage/shop, the powers that be can make a stink that you are carrying out illegal industrial activity in a residential area.

lakeside53
05-12-2017, 09:32 AM
Insurance companies have all kinds of hidden clauses so they can screw you when it comes time to pay out.

JL.............

But the clauses are not hidden. You agree to them and get a copy of the policy. if you have concern what constituents a business verses a hobby all you have to do is ask.

Many policies only allow you to have 1 gallon of flammable liquids stored inside (gasoline obviously, but what about way oil, spindle oil etc.). How many adhere to that with an attached garage shop?

BigMike782
05-12-2017, 08:32 PM
Even if you have no interest or desire to do for profit work you are suspect to the insurance company. Mine found that I had welders and machine tools and immediately said I was doing for profit work......it took some fancy foot work and fast talking to convince them this equipment is for my own personal use.

PS4steam
05-14-2017, 10:57 AM
When I moved and built a new home and shop a new insurance company was needed. I photographed the shop, my models, etc. Handed it with a list of all the tools with estimated value and a description of what I did. Each came back with different approaches to insuring everything and a visit to the shop to take their own pictures. Everything is in writing so no confusion. The one clear stipulation I made was I did not use shop as a business. I would do work for neighbors or other modelers but only at cost of materials, and this was rare as I have too much on my plate. I told them I occasionally sold a model I built that I was not longer interested in and they did not count that as a business. I have reviewed this twice with the insurance company in the last 12 years. I had live steam 1 1/2 and larger so insurance was always a challenge but always found a way to get things covered be it at home, on the road, or at a show. It just took working with the companies. I no longer have those.

There are no hidden clauses, everything is in the policy, just read it and sit down with your agent for explanations. The adage "what the insurance company does not know won't hurt them" is correct - it does not hurt them. It only causes issues when we present a claim. Basically you get what you pay for and that is the point of insurance, how much do you want to pay for. It is just a commodity like anything we purchase - you can get a streamlined one or one with lots of bells and whistles.

Bob

KiddZimaHater
05-14-2017, 12:21 PM
Insurance companies have all kinds of hidden clauses so they can screw you when it comes time to pay out.
In my opinion, Insurance Companies are the biggest crooks on the planet.
They gladly take your money every month, but when you have a legitimate claim, they dance around, hem-haw, find clauses, and do everything in their power NOT to pay you.

Ohio Mike
05-14-2017, 03:31 PM
As said the key is to read the whole policy. Its a legal binding agreement. If you're lying or running an undercover business then you're asking for it. A good independent agent can be a real help. In my case after my policy was dropped due to unrelated issues I had a real honest discussion with my agent and we found out that virtually none of my tools were covered under my prior policy. Something like $1000 cap (yikes!) on tools with a large nationally known company. I now have a good policy with regional and includes a rather large rider on the policy. Coverage is declared value on a defined inventory. I made up a spread sheet with a full list of what I wanted covered. Declared value was nice as I could balance the insured value vs the premiums. I prioritized the list of all the tools. The "must have" were insured at full replacement, then the rest were broken down at used replacement cost (auction prices etc) or just not insured based on priority.

H380
05-14-2017, 03:59 PM
Yes. Better yet get a consultation with an Attorney. That will open your eyes and worth every penny. Also the national insurance Co.s are also starting to include Neighborhood restrictions / HOA BS in your policy. More reasons to live in the country.