Home insurance and metalworking

I don't remember my insurance company asking me any questions about it.

It might depend on where it is in the home, should they find out. Detached garage shouldn't bother as much as in the basement. You *may* want to be sure that the house is even covered under such conditions. Some may have a clause restricting any commercial activities. Check your home owner's association. They may be way tougher than the insurance companies some time.

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Joe Pfeiffer wrote:

The HOA would be a very different animal than the insurance company... and the concern with them would be complaints before the house burned down, not after. That actually brings up a short story: a while ago, a neighbor asked me if I'd mind if he put up carport in front of his garage. I looked at him blankly, and he reminded me that it's a violation of the covenants in our neighborhood. I said, "oh, yeah -- see that metal shed in my back yard?" I figure nobody in the neighborhood can complain about anybody else, because we're all in violation of the convenants somehow.

As for coverage in the event of a fire... hmm... maybe I should read my policy.

Thankfully we do not have HOAs here.

The issue would not have arisen had I not been in the process of renewing my policy and the question of "home business" came up. I have sold some of my pieces to the total of less than $100 in a year. I did not set out to profit from what I do. Calling it "business" is somewhat presumptious.

Now I am waiting for the insurance company to clarify their position via the broker.

I do not see much point speculating on the outcome, but I was interested what others' experience was in this direction.

Will they stop me doing what I do if I sell the stuff, i.e. is it OK if i keep it or give it away? Will they put restricitions on the level of income? Will they put restrictions on the type of process that can be employed, e.g welding?

I shall know in a few days.

The biggest issue is do you machine for people for cash. That puts you in a different category of insured. Using home insurance for a garage business is going to give you grief if chit happens.

Wes

-- "Additionally as a security officer, I carry a gun to protect government officials but my life isn't worth protecting at home in their eyes." Dick Anthony Heller

At least in the US, the IRS is perfectly clear about this for their deduction purposes: such an activity, operated at a loss over several years, is clearly a hobby to them.

e.g.

Of course this is probably not the determining factor in local business permits, zoning laws, etc.

Tim.

If I recall, the IRS doesn't care about misc. income under $600/yr, so neither should your insurance company. One thing I do recommend, independent of everything else, is to get a PLUP a.k.a. Personal Liability Umbrella Policy. A PLUP is generally quite inexpensive and gives you an added layer of liability protection that covers essentially anything but intentional acts.

Based on what I know of insurance, and that's not a lot, your's should be considered a hobby since you are not making a living at it. Our tax laws (U.S.) allow hobbists to make SOME money without having to declare themselves as a "business" so I would suspect that you would be pretty much the same. Good luck on your dealings with the insurance company.

Jim

If you are in an incorporated city and you ARE doing business out of your garage/home (no matter HOW small) and you don't have a business license there are more people than your insurance company to worry about. Even if it's not in an incorporated city, the state should want some tax money too...

IMHO If all you've made is a 100 bucks you should have never even mentiond it... Insurance companies are NOT your friend, they are a business that makes money for their investors... now you are directly in their sights and have given them reasosn to either raise your rates or stick a rider on your policy that may well nullify your coverage in some cases...

good luck

--.- Dave

Less than $100 in a YEAR? That is a HOBBY, by any number of guidelines. No WAY could that be construed as an actual business, if it is SALES of $100. (Maybe a net of $100, if you have hopes to "make it up on volume" could be different.)

Yeah, welding may make a difference, but if it is clearly a hobby activity, as yours seems to be, then I think they have to prove their case.

Jon

Taxation practices of the Gov't., and premium setting practices of insurance companies have no relation to each other. When it costs the gov't. more to collect, than the amount collected, they are willing to ignore the source, whereas, with insurance companies, any activity beyond lying still and breathing will increase their risk and therefore the premium charged. Gerry :-)} London, Canada

I have been away and my access to e-mail and newgroups was restricted. It seems that the insurance company is happy not to raise my rates *as long as I do all my soldering and welding at least 25 feet away from the house*. I can see the welding but soldering? They are insane!

The negotiations continue..

"Soldering" sets off alarm bells in the insurance industry's head because of the frequency of plumbers soldering copper pipe in a house setting the house on fire (despite precautions). There's probably some completely unjustifiable panic from lead-in-solder concerns too (I'm not sure that's reached BC yet but in most US cities there are extreme precautions that have to be taken when working around old leaded paint.)

An open flame inches away from studs and wallboard is pretty problematic, but that's not what you're doing in your garage at all.

Tim.

Soldering to an underwriter, as they are looking at the rate rule book, would also include silver soldering and brazing, in which you would be using oxy/acetylene welding equipment, which is why the same 25 foot rule for soldering. If this is not in line with what you are doing, try reasoning with the underwriter or his representative. If, they are in the right frame of mind, they can be reasonable, as long as they feel their butt is protected, from all those who may later review their work on your file. You may get a premises inspection from the underwriter.

I had a meeting with the broker today. It looks like they will restrict the waiver to welding not within 25 feet of the buildings and leave the soldering out. I made a specific point that I do not use oxyacetylene.

Either way it is going to be PITA, increasing time and costs of "production".

I am looking at alternatives, but epoxy will only go so far...

BTW whoever mentioned that it was a mistake admitting to insurance company the occasional sale was absolutely right. Honesty is definitely not the best policy in all instances! Now, as far welding is concerned, I am screwed whether I make the stuff for sale or not.

========== Now if you were a "normal" person that would not waste their money on tools and instead invest in a 72 inch plasma TV....

Unka' George [George McDuffee]

------------------------------------------- He that will not apply new remedies, must expect new evils: for Time is the greatest innovator: and if Time, of course, alter things to the worse, and wisdom and counsel shall not alter them to the better, what shall be the end?

Francis Bacon (1561-1626), English philosopher, essayist, statesman. Essays, "Of Innovations" (1597-1625).

Best check your policy. They (insurance co) have been adding all sorts of limits for this type of stuff. I suspect ~$5000 set would not be covered unless you had a special rider for it...