Looking for some thoughts on insurance, I’m a bike mechanic working out of my garage, and have no shop affiliation. I have a number of customers from the area, and I mainly do repairs, maintenance, and tune ups. My business is all word of mouth, and I focus on offering excellent service and follow up to any issues, but wondering if I need to consider insurance.
Thoughts I’ve had:
What if I’m tightening a bolt, and something cracks (like a $3000 frame)?
What if a customer bike gets stolen from my home?
What if a customer has an issue after the fact, gets injured, decides its my fault?
Some homeowner’s policies allow you to add a rider for at home business liability protection. Some General Liability (“GL”) provide at home business liability. There are some “in home business” policies and of course you can buy a “normal” business liability policy.
Each state is different what they allow in policies. Naturally, read the policy in full before accepting it. If you can find a business focused agent, you’ll get the best service, but they might explain ALL the risks you - meaning more coverage. What they’re telling you is factual, it just may not be something you may not have a concern. Some agents may try to explain a policy at a high-level. You really want to read it and understand it.
I know I mention “business” a lot. In the insurance world there’s no such thing as a hobby when your charging. If you build something and sell it on Esty, eBay or ST, it’s a business.
You don’t need to buy all the insurance in the world, just the right policy with the right amount of coverage.
In addition to the insurance issue, which I think is clearly a yes, you also may want to look at some sort of simple business formation to insulate you/your family from any sort of liability related to the business. Some sort of LLC, or the like that gives you a layer of personal protection.
Where are you located . . . I would LOVE someone like you near me.
(Let me be clear that I’m a financial planner/investment advisor/insurance guy. I’m not soliciting, but giving you educated and experienced advice.)
@David may be correct that you want to create an LLC. My experience is that this is not necessary with the right insurance. Creating an LLC is easy, but does require a 1065 and K-1 every year and generally some sort of state filing. The LLC won’t save you in taxes and will increase annual work.
It probably won’t help in protecting you either. For example, let’s say your a mechanic at your LBS and you screw something up. Who get’s sued? The LBS and you, personally. So, if you create the LLC and you screw something up, who gets sued? You and your LLC. Now, if you had someone working for you, then if they screwed up you’d, personally, be protected with an LLC. But for non-employee businesses, except for marketing/PR/Advertising reasons (and sometimes a DBA is good enough for these), having a separate LLC typically isn’t valuable.
Since you’re in Canada, obviously the tax situation and possibly business structures are different. How different, I do not know. I would venture a guess that the basics of law are similar since they’re both come from an England basis. Probably a simple call to a friend in Canada who is knowledgeable in the basics is all you need to get clarification.
Looking for some thoughts on insurance, I’m a bike mechanic working out of my garage, and have no shop affiliation. I have a number of customers from the area, and I mainly do repairs, maintenance, and tune ups. My business is all word of mouth, and I focus on offering excellent service and follow up to any issues, but wondering if I need to consider insurance.
Thoughts I’ve had:
What if I’m tightening a bolt, and something cracks (like a $3000 frame)?
What if a customer bike gets stolen from my home?
What if a customer has an issue after the fact, gets injured, decides its my fault?
Appreciate any experience or thoughts!
This is a cost of doing business, and not really insurable. “Statistically, I’m probably going to break 1 frame a year, and need to allow for the cost of this in my margins.” Also, consider your communications with the customer in some situations “Hey, that siezed seat post you brought in - I’ve applied as much force as I’m comfortable with. There a couple more things I could try to unsieze it involving a sledgehammer and a flamethrower, but there is a risk the frame may break. Are you ok with that?” Basically transferring the risk back to them (with their explicit consent).
You’ve probably got $10k of tools there, plus $10-20K of customer bikes if you are dealing with high end bikes. If thieves clean you out, or your garage burns down, that’s pretty painful, but not “lose your house” territory. Probably best to insure this, as an insurance payout will help get you started quickly again. Expect some deductible here, as the insurance company will want you to have some skin in the game, as an incentive to make sure you lock up securely each day, that flammable materials are stored properly, etc.
This is “lose your house” territory, and you probably shouldn’t be operating without public liability insurance.
My suggestion would be to talk this over with a business insurance broker.
I’d talk to a lawyer about this. I use legalzoom and it’s not expensive for their subscription service, you can schedule a consultation at anytime with a lawyer, it’s included in the monthly plan. The advantage of having an LLC is that if someone decides to sue, they can only go after the business, and not your personal assets.