shopping for insurance for my saddle making business

[Go2Tex]

I'm going to be shopping for some insurance for my saddle making business and I thought I'd ask for some advice from the esteemed membership herein.

Anybody know of a company that specializes in this particular risk catagory? I'm guessing I'll need something with some product liability, premises med pay for customers who wander up, and some coverage on my shop building.

The problem is, of course, once you have a bonafide business at your home, your homeowners insurance will exclude any claim resulting from the business.

[wolvenstien]

right....

Reminds me when I was a contractor for the cable industry.... I had to have my own insurance incase I killed a customers equipment, the cable companys equipment, if I drilled through the house, fell through a ceiling, or whatever... also I had to have insutance on my truck and tools incase of accedent and theft and all that.... I went to an agent... he told me what I needed and I got it all through him at the lowest rates I could going through an agent.... most everything was a rider to the liability policy... it was not a part or all inclusive in the policy, it had to be added for a fee.... but I got the coverage I needed and it worked... though he told me that if I ever made a claim they would pay but then drop me.....

[Go2Tex]

..................though he told me that if I ever made a claim they would pay but then drop me.....

Yeah, that doesn't surprise me and then it would be difficult getting insured by anyone.

[Luke Hatley]

Yeah, that doesn't surprise me and then it would be difficult getting insured by anyone.

that is the insurance of the "AMERICAN WAY" take your money.....

good bye and dont let the door bump you on the way out.

BUT THIS IS SOMETHING WE ALL HAVE TO HAVE. whether, home

automobile or business....

[Cowboy Crafts Online]

The first policy I got on my saddle shop was though the local Farm Bureau. They had to run me under a Sporting Goods Store, because there is not a saddle shop policy in thier system. Then I found a local company in MO that gave me better rates and better coverage, email me and I will send their phone number to you. I dont know if they cover anyone out of the state.

Ashley

[Johanna]

Guys, I'm going to move this thread up to the main part of the board, because saddle shops aren't the only leather businesses that must carry insurance, and I'm sure others will be interested in how you decide to protect yourself, or may have experiences of their own to share about shop coverage.

When we had a custom leather shop years ago, insurance companies didn't want to touch us. They didn't have a place on the form for "leatherworking shop" and they didn't like the potential risk once we explained the business. They didn't like customers coming to our house (where the shop was!) and they were concerned about liability if our work was to "fail". (I remember bringing one agent a piece of 8/9 oz leather and inviting him to break it. He wasn't very smart, because he was impressed, and never gave a thought to a seam or rivet popping!)

I hope things are different now for the leatherworkers in business.

Johanna

[K-Man]

Go2Tex:

You're correct - homeowner's insurance normally won't cover the business side of the house. In fact, some homeowner's insurance companies will drop you if they find out there's a business being operated from the house, even though it may be legitimate to do so.

You'll need to determine how much coverage you want. Most businesses that are renting/leasing space have a minimum amount of liability coverage required, i.e., 100k, 200k, etc. Under that policy, some of the factors considered by the underwriter for the premium will be amount of shop space, value of equipment/cost to replace (single item vs total), what you're making/offering, retail cost of the goods, total amount of sales, risk of injury (both to you when making it and by the end user). If you have fire extinguishers and a security alarm system in place, that normally will provide for a lower premium. If you add employees, that may or may not affect the premium. The premium for employees is normally based on the salary and amount of work/hours they are being paid/performing. Most insurance companies will run an annual audit on you to make sure you're staying within the parameters of the policy. You won't be in trouble if you go outside of it, i.e., make more money than projected, they'll just adjust your premium accordingly. But if you signifcantly underestimate your gross sales, and they determine you did that in order to receive a lower premium, then you're probably going to be in the hot seat over it. They most often rely on your tax return as their audit mechanism.

There are some underwriter's who will want to limit what you can make/offer. For example, a couple of the one's our agent talked to did not want to cover any saddle work. I basically told my agent that while I probably would not do any type of saddle work, I didn't want to be limited on what I could do/offer. In our instance, some of the underwriter's freaked as soon as they heard the word, gun (holsters) and basically hung up on our agent. We've added other aspects to the retail side of our business over the last year, which I anticipated would cause a premium increase, but that did not materialize. The only parameter(s) placed on us was that the total sales amount for these items could not equal more than 20% of our gross sales. For example, if we have $25,000 in gross sales, we can only have $5,000 worth of sales for those items. One reason for a limit such as this may be the perceived elevated risk of the items being sold.

My recommendation would be to get as much coverage as you can afford, based on the amount of work you want, and will be able, to do. For example, we are required to have a minimum of $300k in coverage at the building where our shop is located. We opted to get $500k worth of coverage for literally just a few dollars more. As a side note, our premium dropped $200 this year in comparison to what we paid last year. (That doesn't happen very often does it?)

Edited July 19, 2007 by K-Man

[Go2Tex]

Go2Tex:

You're correct - homeowner's insurance normally won't cover the business side of the house. In fact, some homeowner's insurance companies will drop you if they find out there's a business being operated from the house, even though it may be legitimate to do so..................

Fortunately, I mentioned my intentions when I was getting quotes for my homeowners insurance and they wrote the policy, so that's not going to be an issue. But, the saddle thing.......geeze, I can't figure that one. You'd think the risk would not be that much. Anyone ever heard of a saddlemaker being sued for product liability? I suppose it could conceivably happen but it seems to me that the assumption of risk by the rider is huge. You hop on a horse and you're assuming a big risk from the get-go. If there was a big risk of product liability surrounding horse gear, it would all cost so much nobody could afford it.

Any lawyers in the crowd?

[Johanna]

I received a PM from a saddlemaker who said his insurance company insists that his customers sign a waiver, which their lawyers wrote, when he sells a saddle or does a repair. He is paying for coverage for liability in case someone falls off of a horse and sues him, not coverage for the shop, which he has included in his homeowner's policy. Go2Tex, since your shop is covered by your homeowner's policy, I'm thinking you are investigating a similar coverage or rider?

Johanna

[Go2Tex]

Well no, they said my shop, once I get it built, would not be covered because it is a business. They didn't suggest a rider, so I rather suspect they'll want to do the whole thing on a commercial policy.

There must be a couple million saddles sold every year and I can't help but believe that only a tiny fraction of them are sold with any kind of waiver or release drawn up by some insurance lawyer and signed by the purchaser. The hang tag might have some moronic warnings and legal mumbo jumbo on the back of it but, ... geezus....Can you just picture this scenario in your local tack store? "Er, excuse me, Mr. Cowboy, before I sell you this fine roping saddle, I have to get your John Henry on this insurance form. It says in case you fall off your horse, you can't sue us." .... "Oh, and by the way, are you aware that throwing a rope around a big, dumb animal like a cow, while riding another big dumb animal like a horse, is inherently dangerous?"

It may be real sound legal advice, I don't doubt that. It's just that there seems to be a very large gap between the real world and the world of insurance underwriters in this case.

Could it be that most saddlemakers just don't bother with it?

[Johanna]

"Oh, and by the way, are you aware that throwing a rope around a big, dumb animal like a cow, while riding another big dumb animal like a horse, is inherently dangerous?"

Johanna

[Art]

No more so than jumping off a big dumb animal who is trying to catch a slightly smaller dumb animal with horns who has just been hit in the butt with a cattle prod, grabbing said smaller animal by the head and horns, planting your heels in the ground and flipping you and the aforementioned animal on your backs, all in 2-3 seconds. And we're worried about leather breaking? Good thing the cows and the boys are both young.

Art

"Oh, and by the way, are you aware that throwing a rope around a big, dumb animal like a cow, while riding another big dumb animal like a horse, is inherently dangerous?"

[Go2Tex]

.......smaller dumb animal with horns who has just been hit in the butt with a cattle prod, grabbing said smaller animal by the head and horns, planting your heels in the ground and flipping you and the aforementioned animal on your backs, all in 2-3 seconds. .......

UH-oh... I hope this topic doesn't get hyjacked by the animal rights activists... probably end up arguing the merits of horse slaughter..... a topic only slightly less volatile than saddle fit.

[Art]

Hi Tex,

We have a few (underestimate) of them around here, but they even think leather is evil so there is no talking to them about people rights. There is no way to reason with that stuff, you just have to tell them we disagree and to get out of my face.

Art

UH-oh... I hope this topic doesn't get hyjacked by the animal rights activists... probably end up arguing the merits of horse slaughter..... a topic only slightly less volatile than saddle fit.

[K-Man]

Well no, they said my shop, once I get it built, would not be covered because it is a business. They didn't suggest a rider, so I rather suspect they'll want to do the whole thing on a commercial policy.

....

Could it be that most saddlemakers just don't bother with it?

I cannot speak for any saddlemakers, but I know there are quite a few of the small holster shops that don't bother with it.

I agree that you would expect common sense to be considered, i.e., you get on a horse, there's the potential to get hurt in some fashion. But you would have thought the same thing about the coffee being hot that you get from a restaurant....

With the vast number of frivilous lawsuits in the world today, why would someone go without it? In my opinion, to not have the coverage is too great of a risk. In most instances, one substantial award by a jury in a product liability case would wipe out most businesses.

[barra]

First of all great topic Go2tex. I hate to play devils advocate but i thought I might add a few possible scenarios. We live in a litigious society and my side of the pond is not far behind the US in ridiculous, frivolous lawsuits. I am sure a certain money grabbing profession fuels the idea into some equally money grabbing plaintif to go after these huge sums of money. Ridiculous (to the average person) lawsuits like the hot coffee one or the recent dry cleaning suit because some hard working mum and dad business made the fatal mistake of using the age old slogan of SATISFACTION GUARANTEED are becoming common place. Oh and who can forget the Darwin award candidate who put his Winnebago into cruise control and left to make coffee or something, then sued because no warning was added saying leaving a moving vehicle is unsafe.

We make horse tack that is then put onto a living breathing animal with a mind and a will of it's own. The most bomb proof horse on the planet can not be guaranteed not to ever go off the rails. Now while most of us fully accept the inherant risks associated with our equine pursuits and apply what most of us assume is common sense, common sense is relative. How do we judge that the person using our tack has the same level of common sense as us.

Where have any of us gained our knowledge of saddle/tack making. More than likely it was via an old well respected saddle maker and in my case a 3rd generation saddler. Your mentor gained their experience from tried and true methods in saddlemaking. Used what are generally regarded as the best materials available to make that saddle. More than likely they never went to any formal teaching institution and even tho they call themselves a master saddler, never gained a recognised qualification. The skills you now have have been passed down from generation to generation and were formulated pre litigious society.

Who then has carried out the engineering test specifications to say the ticket 18 3 cord you have used to stitch up that item is rated to tensile strength X and that the worlds best practice for that item is to stitch X stitches per inch for X distance using ASTM stitch pattern 301. Or what about the buckle you have used. What stresses can it withstand. How many tree makers have had engineering testing done on their trees. What is the life of that spool of thread sitting in the shelf for umpteen years before it degrades or the Nylon spool sitting by the window being degraded by sunlight before we decide to use it. We can go on and on with all the materials that we use.

Add to this the saddler who allows a customer to come into their shop and venture past the display case into the actual workshop. That customer then leans against the splitter and cuts themselves. What about the apprentice you take on who electrocutes themselves on the stitcher that has not been electrically tested since Jesus played full back for jerusalem or who uses the Neatlac made from Toluene and heaven forbid you have not provided the correct PPE or disposed of the empty tin in accordance with local chemical regulations.

Do I think some of what I have said is ridiculous, ABSOLUTELY. But when your item of tack has broken and someone injured riding that living breathing animal listens to the advice of a certain money grabbing profession BEWARE. We are involved in an old profession/hobby in a modern society. Is it any wonder some saddle makers are getting their customers to sign disclaimers.

Just my 2 bobs/cents worth.

Barra

Edited July 20, 2007 by barra

[Go2Tex]

Thanks Barra, your 2 bobs makes a lot of cents, er, sense. I hadn't really given any of this much thought until recently but I suppose it's a necessary evil in a world controlled by these "certain money grabbing profession" bottom dwelling scavengers.

Well, looks like I'm gonna have to be raising my prices to pay for all the insurance and legal fees, incorporation, homesteading, quick deeding to my dead horse or whatever it takes to protect my ass-ets.

Because of the "deep pockets" nature of litigation, it's become a damned if you do and damned if you don't situation. If you have insurance you become a target, but if you don't you could get sued anyway and end up losing your house and first born.

Maybe I'll just go into the key fob business. Not much liability there.

[greg gomersall]

Go2tex I have a policy thru Zurich Ins. for my shop. It is a seperate building right here on my place. It covers the building, inventory, tools and equipment, etc. It also covers liability if someone were to slip and fall at the shop or such thing but it doesn't cover me for product liability. like yourself I'm not new in this business but they would not even quote me on the product liability end. I pay just under a grand a year for the coverage I have. Greg

[Go2Tex]

Thanks Greg. That's exactly the kind of info I was looking for. But it does confirm my worst fears. My costs just took another huge jump..... which means my hourly wage is now somewhere between "almost nothing" and "why and I doing this?" :

[mulefool]

If a person could figure out a way to injure themselves with a key fob, it's probably happened. I have my shop on my property in a separate building. I have a separate policy on the business through the same company, Allstate, that has our house and cars and trucks. I have the shop and contents insured for about $100,000 although I don't think I have that much in there, they seem to think so. I have 2 million in liability. It seems like there's always things included that you don't think you need. Theres something where if a person injures themselves on the property, even if it is completely NOT my fault, they will still pay up to $500 for any medical bills as a "good name" type of deal.. Although I bet if I ever actually used it I'd be sorry when I got the next bill. For this I pay $1,300.00 per year. I guess in the back of my mind is the fact we could lose our place over some frivolous lawsuit and the $1300 per year helps me sleep at night. Now I need to be thinking about whether to change from a sole proprietorship to a Limited Liability Corporation. I think each state has it's own rules on that.

[Tangent Creations]

Hey all! We also have a shop on our land seperate from our house. We cover it through the same company as our house and vehicles (which are great advertising!). Part is for liability for injuries of customers or workers and part is because of the nature of some of our equipment (we also do alot of metal work) that we're covered if our shop were to burn down. As for product liability, it keeps me from offering tack, though I'll make specific breakaway halters, and do minor repairs. I make my own tack, but I'm not going to sue myself . But on the customer end, we don't run a 'retail shop' on our land, so that wasn't too much of a problem. People come out only for special occasions...

I did talk to a good friend of mine who runs a tack store, and she said that companies like Abbeta and Circle Y and such have some super serious liability insurance and that she had to have insurance too because she sells the product.

[Seasoned Warrior]

If you are in California, I'd like to submit an insurance quote on your leather shop and see what we can work out.

Click here to email

~~I hid your email from the spammers. Johanna

[Michael Sheldon]

I've you're a small independent, household insurers will often write a "rider" to cover business issues, but be careful that it might only cover loss, not product liability.

If you're incorporated, or more than a small shop, you're probably looking at getting a commercial policy. We're in the process right now of getting a quote from Hartford.

[daviD A Morris]

Is there a database anywhere that one can find out about the outcomes of lawsuits? I have heard of a number of cases both here (in Australia) and in the USA that involved people suing over faulty saddlery gear. But some of what you hear is myth, and it would be nice to be able to "check it out".

One of my questions is: Does anyone know of any retailers who sell that sub-standard junk saddlery from 3rd-world countries being sued for injuries caused by poor quality horse gear breaking? I recently had a guy show me his "new" saddle that he bought from a tack store. The saddle was made in India, the rider is 6' 4" and weighs in at around 260 pounds, is a very novice rider and had also just bought a clydesdale horse to ride. I explained to him that I had seen a lot of those saddles with broken trees and/or the stirrup leather hangers break and that I did not consider it safe for him to use. If he had a serious accident from that poor-quality saddle, it is not much use him trying to sue the maker in India, so I assume the tack store's negligent sales person selling a product which was not "fit for its purpose" would be sued. From all this I can only guess that the tack store has a very good product liability insurance policy.

For how many years after selling a new item is a maker liable for the safety of that product??? and check your insurance policy carefully, some policies have to be in place when the claim is actually made, which means that if I stop making saddles ( and go get a real job) I will still have pay insurance for product liability in case a claim comes in!! or conversely - if a claim was made against a saddle that I made and sold 4 years ago, when I was not insured, then I would not be covered.

Insurance premiums might buy some "peace of mind" but not much!! I assume you guys read your insurance policies very carefully.

regards

dam

[DWL]

New member and first time poster...

Great topic... and unfortunately very important.

Earlier this year at a local rodeo during slack, a calf ropers saddle swell broke clean off his saddle as the rope came tight. With the rope still tied on the horn it lodged against the neck rope on the horse as the calf strained. There was a certain amount of panic from the horse, but not too bad as several others came in to help. This could have been a real bad wreck.

Would the saddle maker be responsible for an expensive rope horses injuries? The saddle was a production saddle, however very popular among tie down ropers and after a closer look at the damage, it appeared the only thing holding the tree together was a thin single layer of fiberglass that was torn away from the rest of the tree. The tree may have been an inexpensive one made in Mexico (?) Would the saddle maker take the full liability if the failed saddle tree was made out of the country? I would think if a saddle is sold as a roping saddle, most of us would believe it would stay together when roping a 400 pound calf. Would labeling a saddle as a roping saddle increase ones liability? Also, this was not an old saddle, it appeared to be a newer looking saddle with plenty of tooling. (the insides apparently did not live up to the outside)

All my saddles are handmade with good USA made trees and I feel confident that when I rope a steer everything will stay together. Now, more than ever I would be afraid to put that kind of stress on a cheaply made production saddle.

Thank you for such a great forum, keep up the good work...

Dave