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Insuring Equipment?


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So, as some of you may or may not have seen, last summer, around 1/4 of the state of Washington went up in flames last summer. The drought and dry lightning, coupled with horrible winds, burned millions of acres and several towns to ash. This year, just last week, we shattered a 100-year heat record, and the fires have already sprouted in a dozen places--including a 350 acre one only 18 miles north of my home.

 

So...in case the absolute worst happens, how should I go about insuring my studio equipment and work I'll be leaving behind? I live in a one-horse town in the middle of a dang wheat field, and I know the fire season is licking its chops at the sight of it. I'm not being paranoid, either--just ask Amy Eberhardt how dry it is here! Only the west side is wet; the middle is scrub desert and the east is on the edge of it. It's a crazy state!

 

Say what you will about the cold...at least it doesn't torch everything to ash. So stressful here this time of year! :(

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First, check with your homeowners insurance company to see what your coverage encompasses.  However, and there is always the however, if your kiln, wheel, equipment, inventory is for your business, your homeowners insurance may not cover it.  I have a separate business owners policy that covers my pottery studio equipment and materials and inventory (as well as coverage for fairs, events).  Same company as my homeowners.  $325 year.  Covers replacement of studio equipment and inventory (less deductible).  Insurance policy is deductible as a business expense. 

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First, check with your homeowners insurance company to see what your coverage encompasses.  However, and there is always the however, if your kiln, wheel, equipment, inventory is for your business, your homeowners insurance may not cover it.  I have a separate business owners policy that covers my pottery studio equipment and materials and inventory (as well as coverage for fairs, events).  Same company as my homeowners.  $325 year.  Covers replacement of studio equipment and inventory (less deductible).  Insurance policy is deductible as a business expense. 

^ This.  Most homeowner policies will have a specified amount under "Contents".  Check your policy to see if there is an exclusion for business items.  Many commercial policies and even homeowner policies will place limits on certain types of equipment.  In the event of a claim you will have to show proof that you bought it.   I just looked at a case where someone had $25K of computer equipment coverage.  And could not provide proof of purchase for that amount (they had no where near that amount ... like 5K max) and were thinking they would just get a check for $25K.  Keep this in mind when getting your policy .. don't pay to over insure contents because you won't get it if you don't have proof.  Proof is not just receipts but the adjuster can look and see what's left of items in the debris.  When my store burned, the adjuster went through and made a list of all the pieces of things in the store and assigned values. 

 

Take photographs now and store them on a cloud.  Make a list with serial numbers  and store that on a cloud too.  The 2 of them should provide enough proof of existence.  I don't know of any insurance company that just writes a blank check for the amount of contents.

 

(and I hope you don't need this ... good luck)

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I just talked to my brother who is a top agent for Alfa Insurance and he said it was very important to see if  policy states either 1) actual cash value  replacement or 2) replacement cost.

 

For actual cash value  a lot of commercial equipment is depreciated off in 5 years and that's the number the insurance company would use to replace ... "nothing".   He said he doesn't write a policy where actual cash value is used for equipment because in all likelihood  a claim might be a few years down the road, making the equipment worth almost nothing, thus the insurance company paying nothing.   He said the better option for potters would be replacement cost because our equipment lasts longer than 5 years.  A replacement cost policy may contain the stipulation that you actually have to replace the equipment in order to collect.

 

He said it looked like Bcisket's $325/year premium looked pretty much in line for about $25K of content coverage and liked the caveat that it covered off premises (but said to check for replacement cost).

 

He said if someone had a lot of materials, say $30K of clay and glaze, a policy might allocate $30K of content coverage for actual cash value and an additional $25k of replacement cost for equipment. (a total coverage of $55K)  A price savings would probably occur around $30K for a split policy coverage.  For my business I just have one replacement  cost policy for business equipment and materials coverage.  As a general rule (not always), replacement cost policies are to the benefit of the consumer in the way of contents.   (as for houses, it can be different)

 

You have to be very careful with insurance.   Some companies look for ways to avoid payout.  They know when the policy is issued they will have a way out.  If you saw the kind of crap State Farm and Allstate pulled after Katrina, it's quite evident many companies will try to beat the consumer.    Just Google State Farm and Katrina and watch the pages appear.   10 years and still going.  Yeah Jim Hood! http://www.clarionledger.com/story/news/2015/04/21/ag-hood-filed-lawsuit-state-farm-katrina/26136829/

 

My brother worked hundreds of free service hours reviewing people's policies, trying to help people collect a claim for the insurance premiums they had paid on for years.  No insurance is a bad thing.  But what's worse is when people have been paying for coverage and they still don't really have any. Obviously I'm a little more sensitive to insurances issues  because my family has been in insurance for 3 generations.    I've seen broken lives put back together with insurance money and I've seen people's lives wrecked for not having the coverage they thought they were paying for.

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My policy provides for replacement cost. 

 

For events, the policy $1M for business liability per occurrence, w/$2M annual aggregate limit, $300K for damage to premises rented to me, and $5K for medical expenses. 

 

For the policy, I went to the agent who provides my auto and homeowners insurance for a quote; been dealing with him for about 40 years. 

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Guinea-hon, as a former FD clerk, I can tell you your policy will be less necessary (and possibly cost less) if you can clear all the dry grass to 100' from your shack. We have Scout and Church youth groups who look for olds and disableds to help, see what you can find! As an added incentive, you might donate some pots to their next fund-raiser, get some added exposure, too.

A little light from ashes:

A potter friend's sister lost her home to the Oakland fire. The only things to survive intact were some of her pots.

The Laguna fire took out a large ceramic studio. The kiln had just fired and was still closed so those pots survived perfectly. CERF was there for them, the story was in CM.

My daughter advised me that, if I had to flee in a hurry, just to close up all those family photos and docs in my empty kiln!

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