Insurance: Your livelihood depends on it - Mind the legalese

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“I think people think of the big companies that you buy homeowner’s and auto insurance from,” Nutt says, “but those aren’t the people you go to for business insurance. For instance, if you pick up the phone book, you want to look for agencies that specialize in business insurance.”

In addition, all business owners should ask about umbrella policies that can provide more coverage at a more affordable price. And there are also some money-saving group plans available. The Wood Products Manufacturers Association, for example, offers a plan where its members can pool premiums to reduce their net insurance costs. The association has endorsed Indiana Lumbermen’s Mutual Insurance Co. as its provider of property and casualty insurance for its membership, but in response to member requests has extended the program to members’ current agents or other agents of their choice, according to WPMA executive director Philip Bibeau.

Nutt, who is also on the board of The Furniture Society, is involved with an ongoing research project focusing on various craft artisans in an attempt to indicate the percentages of those that have business insurance. He initially started surveying the insurance status of Furniture Society members, hoping to initiate a group plan for those lacking it within that organization. Over the last year, he has extended the surveying to members of five other arts organizations, including the National Council for Education in Ceramic Arts, Surface Design Association, Artist Blacksmith Association in North America, Glass Arts Society and the Society of North American Goldsmiths.

While he’s still analyzing the information, Nutt says he’s seeing a lot of artisans who believe they are covered under their homeowner’s insurance, when they might not be. He also notes that the other craft media are in as bad shape or worse shape than furniture makers. He and other CERF members are currently working on educating artisans through print and online publications, and presentations.

“The overall goal is to increase the number of artists who are adequately insured by business insurance plans, whether that is through riders for their homeowner’s [plan], or through a business owner’s plan,” says Nutt.

Mind the legalese
Chris Bednarz, co-owner of the Artful Crafter online informational resource and a retired attorney, says woodworking business owners commonly neglect themselves when it comes to insurance. So along with insuring the business, protecting the owner is first and foremost.

“The premiums look really high until you get sued, and then they look like nothing once you start concurring up the legal fees or bankruptcy or whatever you might face because of a lawsuit.

“The most important asset they have is their health and safety, and they’re dealing with fairly dangerous equipment and dangerous chemicals and things like that. The first thing I would recommend is that these guys look into whether or not they can get themselves covered by workers’ compensation.”

Workers’ compensation is different than health insurance in that it pays 100 percent of the medical costs if the worker is injured on the job. It also provides some kind of income if the worker can no longer work, either permanently or temporarily. The policies available for the owner and for employees vary by state, and Bednarz advises shop owners to discuss options with their lawyer.

Larger shops usually know about this one because it is mandated in order to be in operation. But a custom cabinet shop might not be aware of such issues, says Bednarz.