Offroad fabrication shop liability insurance

85yota

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So I'm shopping for new liability insurance for my fab work, like roll cages trailing arms long travel kits for tacomas etc. Its very expensive and has anyone ever heard of a lawsuit where product liability insurance would protect someone? I have never heard of this happening in the years of desert racing and fab work just seeing if anyone has any input on a lawsuit or issue this would protect someone. Thank you Tommy
 

Josh 8

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The only place where I have any third hand knowledge of product liability in a structurally fabricated product is in the heavy haul industry. And it’s Murray trailer to be exact. And my point of view is from a distant prospective.

Back in the day there trailers where the lightest and the best. And they could sell you a 1/2 built chassis roller for you to complete. This then bit them with a crash/accident that went to court. The customer did some thing wrong on there end with work they did. Well Murray got stuck with the judgment because they had the deepest pockets and liability insurance. After that the insurance companie started doing audits/reviews of the designs. See all the good old design we’re not engineered. They were build by Harley Murray and he was a genius. It was all trial and error and came up with the best designs ever. Well after some issues like the one above the insurance people wanted the trailers to be engineered in a official manner. So they did all this. And all it did was make them heavier and more like the competitions trailers. It actually ruined them as a company and the family had to sell out.

So, what I am trying to say is that unless all your designs are engineered and certificated to a exact set of drawings. Your welder persons are certified for the weld position there going to weld and your welding equipment is inspected and certified, materials used are certified with tracing paperwork and every piece of paper from h.r. to p.o’s are filed and saved for 50 years, no one is going to touch you with insurance. And I know you can’t do this because every off-road prerunner cage is a unique design to every build.

And if an insurance company was to insure you there exposer would last last for 25 years. Meaning any one have come back for up to 25 years and make a claim. It just to unpredictable for a insurance company to forecast.

About all you can do is build it right, cut no corners. Even if the customer wants to cut corners and pay less don’t do it. Build it right. Don’t fall into the “cheap” trap. Don’t work for “cheap” customers. They will get you into trouble.

Lastly, a insurance policy will guarantee that you will get sued 100% of the time. That’s what a lawyer wants to see or know about in order to file. This guarantees a settlement of some sort. Now on the other hand, if your a broke down fabricator/welder with nothing to speak of in your name, there’s no point for a lawyer to sue because there’s no pay day at the end. Think “contingent”.

Bottom line, broke down dead beats don’t get sued because you can’t squeeze them for anything.
 
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Josh 8

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isnt that why you go llc, and all that??, also , cant you just state ' for off highway use only' & be covered ??


Well, first off realize I am not a lawyer. I am trucker that has has a fabrication shop. I am basing what I say on personal experiences, observations and legal council/advise I have received.

The deal is a LLC has to be pressure vessel tight. This includes corporations too. There the same kind of deal. The big issue is if after getting sued, in the discovery process they subpoena your banking records and they find where you have dipped into the "cooperate" account for personal joy ($$$) out side of normal payroll, they have/will wiped out the vail of protection a LLC or cooperation provides. If this happens your back to sole proprietor legal status and I think this is relatively easy to for a lawyer to do with a small business.

The big issue about LLC's is that if you do it right, you can escape state income taxes if you take a once a year draw on the net profit. In cali that would save you 10% in taxes.
 
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JDDurfey

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I too am not a lawyer. But I know people in businesses that are susceptible to lawsuits. They own two businesses. One business owns all the equipment and property. This company then "leases" the equipment to the other company that does all the work. The leasing company is not liable for what the other company does and in case of a law suit the company doing the work and being sued has little to no assets. The only thing the company doing the work has is a little money in the bank to cover parts and labor and pay the "equipment lease" to the other LLC.

This does mean you are paying taxes on two companies and keeping up with all that, but in the end if you are in the business for the "long haul" this could cover your butt. I would also pay a lawyer for a fairly ironclad "release of liability" form for all your clients to sign. Some people may not want to sign it, but that would at least slow the lawsuits down.

When I was a self employed mechanic I had a $500,000 liability policy that covered me in the even I screwed up a piece of equipment I was working on. Thankfully I never needed it, because the first question I was asked every year I renewed my policy was, "Have you ever had a claim against your liability insurance?" I was told that if I ever answered "Yes" my rates would go through the roof. The second question asked every time was, "Do you mount and dismount tires?" That answer was "No" and every time the agent replied with "Good, keep it that way"
 

JDDurfey

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I have some good friends that are lawyers. And while I think they put their clients best interests first, I feel that some lawyers leave a few small loopholes open on contracts and such so they can then bill you for more money as they represent you in a lawsuit case, if there ever is one. Job security...
 

Josh 8

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I would also pay a lawyer for a fairly ironclad "release of liability" form for all your clients to sign.
It's my understanding that this has less value than toilet paper in a bathroom because a person can not forfeit or give up there rights. All it does is "possibly" show that the plaintiff understood that there was some potential danger in an activity. Activity being a key word. Is a fabricated roll cage an activity like riding a roller coaster? No, and what happens to the "release of liability" after the owner that signs, sells the vehicle?
 
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Bricoop

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If someone is going to go to the cost and touble of suing someone, they will often include anyone and everyone that could possbily have the slightest amount of liability. Regardless if you had anything to do with it, you will incur substantial legal fees to get yourself out of that lawsuit.
 

85yota

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One issue I've had brought up to me is what if my design is what caused the failure. My response is I can find people that say my design is good and something else caused the failure.
 

partybarge_pilot

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This is why I stopped doing retail street driven stuff years ago. After looking into the insurance aspect of it I came to the conclusion that nothing would cover me in a lawsuit. Even if you won the cost of defending yourself will put you out of business.
 

85yota

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This is why I stopped doing retail street driven stuff years ago. After looking into the insurance aspect of it I came to the conclusion that nothing would cover me in a lawsuit. Even if you won the cost of defending yourself will put you out of business.
Yeah a simple insurance policy is over 10k. Nothing like starting out every year 10k in the hole.

Even if I had a release saying the vehicles increased risk and its for offroad non street driving only a lawyer could rip that apart in no time.
 

85yota

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Lastly, a insurance policy will guarantee that you will get sued 100% of the time. That’s what a lawyer wants to see or know about in order to file. This guarantees a settlement of some sort. Now on the other hand, if your a broke down fabricator/welder with nothing to speak of in your name, there’s no point for a lawyer to sue because there’s no pay day at the end. Think “contingent”.

Bottom line, broke down dead beats don’t get sued because you can’t squeeze them for anything.

This is my reason. I own a house shop cars etc. I can't lose this stuff or I'd be done living on the street. Going to talk to lawyer about how to protect my personal assets as well as making sure my llc is solid
 

Bricoop

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One issue I've had brought up to me is what if my design is what caused the failure. My response is I can find people that say my design is good and something else caused the failure.
And you'll spend lots of money to do that, bring in expert witnesses, testing, etc. The thing about Tort law in this country is it doesn't matter if you're part had a damn thing to do with the failure. It's going to cost a lot to prove that it wasn't your fault. If you're not going to insure yourself, keep as little cash in the business as possible. Even consider setting up a holding company between you and the operating business.

Additionally, make sure you are familiar with "piercing the corporate veil." Your attorney should consult you on this, I recommend doing a little googling on this before your meeting.
 

Mike_W-RRE

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The SEMA organization helped set up a program through Alliant Insurance Services for automotive aftermarket installers. I use them for my shop.

From SEMA:

On the surface, it may seem that obtaining appropriate and adequate commercial insurance should be a fairly straightforward transaction. According to Corwin, that’s not always the case.

“One of the challenges that companies in the specialty installation market segment face is trouble finding a carrier willing to provide what they’re looking for—garage liability, property and garage-keepers coverage. Another concern is that those companies often don’t have an agent who even understands their businesses.”

To help address those and other challenges, Alliant teamed with SEMA in 2007 to offer an insurance program specifically tailored to meet the needs of SEMA-member companies whose primary business is to sell and install aftermarket accessories. The program—known as Installer’s Edge—now falls under RevPro, Alliant’s industrywide automotive banner. It offers comprehensive coverage that includes up to a $5 million limit, garage liability, garage-keepers legal liability, property and non-owned auto.

“Installer’s Edge is one of our longest-standing programs, going on 11 years, and it’s been very successful,” Corwin said. “When Franco was putting it together, it was founded on the premise that we were looking at an underserved market.”

A prime example—and one that differentiates Alliant from others in the insurance business—is the ability to service first-time insurance buyers, Ganino noted.

“Most insurance providers don’t want the first-time insured,” he said. “They want them to have acquired years of experience and four years of no losses. But as long as they can provide a bio that talks about their education and experience in the trade, we can give them an experience-rated discount to get them insured. That’s been a big plus for us, and hundreds of clients as a result.”

An independent agency (not to be confused with an insurance company), Alliant’s strength lies not just in industry knowledge and flexibility but also in its capacity to serve all segments of the aftermarket industry, Ganino said.

“The over-arching message that we’re trying to communicate to the marketplace is that RevPro is the service effort on our behalf for SEMA that serves all aspects of the aftermarket within the insurance spectrum,” he explained. “SEMA identified that its members have an insurance need and was savvy enough to hire an agency that is large enough to handle the girth of SEMA and nimble enough to vertically align with a number of different segments in the industry.”

To learn more about Alliant’s insurance offerings, stop by booth #20757 in the Central Hall of the Las Vegas Convention Center during the SEMA Show, call 800-390-9099 or visit www.seiainsurance.com.


About fabrication:
Does Fabrication Lead to Litigation?
 

85yota

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The SEMA organization helped set up a program through Alliant Insurance Services for automotive aftermarket installers. I use them for my shop.

From SEMA:

On the surface, it may seem that obtaining appropriate and adequate commercial insurance should be a fairly straightforward transaction. According to Corwin, that’s not always the case.

“One of the challenges that companies in the specialty installation market segment face is trouble finding a carrier willing to provide what they’re looking for—garage liability, property and garage-keepers coverage. Another concern is that those companies often don’t have an agent who even understands their businesses.”

To help address those and other challenges, Alliant teamed with SEMA in 2007 to offer an insurance program specifically tailored to meet the needs of SEMA-member companies whose primary business is to sell and install aftermarket accessories. The program—known as Installer’s Edge—now falls under RevPro, Alliant’s industrywide automotive banner. It offers comprehensive coverage that includes up to a $5 million limit, garage liability, garage-keepers legal liability, property and non-owned auto.

“Installer’s Edge is one of our longest-standing programs, going on 11 years, and it’s been very successful,” Corwin said. “When Franco was putting it together, it was founded on the premise that we were looking at an underserved market.”

A prime example—and one that differentiates Alliant from others in the insurance business—is the ability to service first-time insurance buyers, Ganino noted.

“Most insurance providers don’t want the first-time insured,” he said. “They want them to have acquired years of experience and four years of no losses. But as long as they can provide a bio that talks about their education and experience in the trade, we can give them an experience-rated discount to get them insured. That’s been a big plus for us, and hundreds of clients as a result.”

An independent agency (not to be confused with an insurance company), Alliant’s strength lies not just in industry knowledge and flexibility but also in its capacity to serve all segments of the aftermarket industry, Ganino said.

“The over-arching message that we’re trying to communicate to the marketplace is that RevPro is the service effort on our behalf for SEMA that serves all aspects of the aftermarket within the insurance spectrum,” he explained. “SEMA identified that its members have an insurance need and was savvy enough to hire an agency that is large enough to handle the girth of SEMA and nimble enough to vertically align with a number of different segments in the industry.”

To learn more about Alliant’s insurance offerings, stop by booth #20757 in the Central Hall of the Las Vegas Convention Center during the SEMA Show, call 800-390-9099 or visit www.seiainsurance.com.


About fabrication:
Does Fabrication Lead to Litigation?
I contacted them and since I do roll cages they said it was $6500 a year minimum. Cheaper but still not as cheap as I was hoping.
 

85yota

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Got a new correct quote. Since I do roll cages its 7500 a year. Going to talk to an llc lawyer to see what all that protects me with and make sure its iron tight
 

85yota

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Does anyone know a good llc lawyer to get that transfered to California and make sure its all setup and solid too?
 
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