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  1. #1
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    Insurance for Framebuilders

    A home for this discussion..

    Do you think it's necessary?

    Do you have it? (if so, where did you buy it?)

    Thanks

  2. #2
    Randomhead
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    I don't know how the insurance market works in the UK. In the U.S., bike shop and bike manufacturers can get insurance through NIPC underwriting. One thing many people don't consider when they build for others is that the liability lasts forever. Since the NIPC insurance covers claims made in a given year, a framebuilder should budget to keep insurance in perpetuity. At that rate, a significant part of the cost of a frame is consumed by insurance. I feel like I am unlikely to build something that will injure anyone, but the lawyers, family, and judicial system may feel differently if someone is injured while using something I build. And what if I build something out of a component that breaks? My liability. I don't feel that I can make enough money off of framebuilding to pay myself and pay for the insurance, so I don't build for others right now.

  3. #3
    Andrew R Stewart Andrew R Stewart's Avatar
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    There are a few different reasons to feel that insurance is needed (and some that argue for no coverage, but I'll leave that for others to support).

    Some see insurance as protection for their assets. Home, personal accounts, business (inventory, fixtures, accounts) being some of what could be exposed to a wrongful death claim. Some see it just as the cost to be a business regardless of the reasons for it to exist. Some see it as a way to be able to make good if something should go so wrong that your client/their family/their riding buddies should suffer a loss.

    I take this last position. When i was younger I didn't have the same understanding as I do now. Maybe it was the feelings of invincibility that comes with youth. Maybe it was just not having had a personal experience which would have taught me otherwise.

    When i started I built both under others' names and my name initially. Then i got my bike shop and both had to give up the building thing for a few years as well as got first hand experience at how dependent my customers were on my doing the right thing. Thankfully the few incidents (over 15 years) were of minor consequence, customer's rides ruined and only property damages. Once my shop's insurance was involved, mostly not. But i learned that one can't always control every possibility that one is responsible for. We would like to think so but i now know otherwise.

    The shop was closed up as we moved to another state. 7 years later my wife was killed by a inattentive driver. I'm convinced that the driver didn't want to/ didn't choose to not see Emily. But that is what happened. As it was my wife was the major income earner in our house. When the wrongful death claim was made (against the driver) there was little the insurance did to delay or diminish the settlement. As i said recently this pay out was not what my wife would have likely earned during the rest of her viable working life but it has been enough to allow me to move back home and re establish my life, buy a modest home, have some retirement savings.

    So in my case the insurance did everything it was intended to do. In other far less tragic situations (like auto claims or bike thefts) my insurance claims have been processed and paid against in reasonable time. Perhaps my experiences have been uncommonly positive (if having the need to make a claim can be called a positive) in dealing with insurance companies but they are what they have been.

    So like Eric above, I won't build for others (excluding my new wife) until I have insurance. This doesn't stop me from having projects to do and frames to replace. Andy.

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    Ahhh... the (product) liability insurance debate. Is it required? Is it necessary? Is it your responsibility? Yes to all in most cases, which doesn't mean this applies to you in the UK.


    Required? There are circumstances where you are required to have liability insurance. The main ones being homeowners and auto, and any requirements of your lenders or lienholders. In the bicycle world some suppliers require a COI before they will sell to you.

    Necessary? It depends. If you want to cya from someone else's neglicence, and wish to buy from suppliers requiring it, or wish/need to comply with local requirements- it's necessary.

    Is it your responsibility? This is where the debate begins. If the lack of insurance causes a hardship to your welfare, or causes harm to your business or family your responsibility is to make sure you are covered, or take the chance.

    It's been suggested on this forum in the past that you have a responsibility to have liability insurance to cover your clients in the event they are injured while using/riding a product/bicycle that you built, or maintained. Noble? Yes. Real? No. For someone to collect on a claim they must prove neglect on your part and get a judgment from the court. It ain't like they can call your insurance company and ask for money to cover their bills.

    Do you purchase liability insurance to protect your assets? Absolutely. There's no other reason for it. It may not be you personally but anyone (lenders and suppliers) who require you to have liability are doing so to protect their assets. They don't want to be the first in the line of defense with deep pockets.

    I'm sure no one here would do any work, or fabricate anything that might cause harm to their client. I'm also certain that the pros here have any doubts about the safety of their product or work. I'm also certain that none of them would produce an inferior product and hide behind the veil of liability insurance.

    I served a an expert witness (for the defense representing manufacturers) in a bunch of cases naming the defendant. It was an industry not totally unrelated to bicycles, in the fact is was a consumer product, but the product was inherently more dangerous. This was from the early 80's to early 90's, when "ambulance chasing" was at it's height.

    I can tell you this. Most of the cases were ugly- loss of limbs, loss of life, etc. The damages sought were huge in some cases, and some dragged on for years. Had it not been for (PL) insurance a lot of people would be out-of-business. In (most) cases we proved negligence on the part of the user. The cost of defense would bury some really big companies, and small ones too. That's the reason for liability coverage.

  5. #5
    Randomhead
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    my mind sorta skips when people talk about the responsibility to the client. Sounds good, but it's the sort of thing where you could have an infinitely long argument over beers and not settle anything. In the end I didn't have to go any farther than the fact that I owed it to my wife and children to protect their financial interests. It's far from unheard-of for juries in the U.S. see someone with assets and someone with losses and figure why not make the person with losses whole. My father in law paid quite a bit of money to the most badly injured victim of a car crash he was in even though he didn't cause the crash. He was the only person with insurance, but the judgement exceeded that and so he paid himself.

  6. #6
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    I have insurance and have since day one and here's why.............I've been in this business, putting frames together, for over 25 years. 15 of those years have been working for others and the last 11 years working under my own name. In that time I've put together about 8000 frames and to the best of my knowledge none of those frames has failed in a way that hurt anyone. I do my absolute best to make sure that the products I design and build are safe for a lifetime of use...........but I am human, and like every human I am more than capable of making mistakes. And the longer I build the higher the chances are that I will make a mistake that results in someone getting hurt. Anyone that says they are incapable of making a mistake needs to wake up. We have bad days, we get sick and come back to work too soon, we get distracted............**** happens despite our best efforts and intensions. So, in my opinion, the longer a builder does the job the greater the chances are that someone will unfortunately get hurt using the product they made.

    Knowing this I want to be sure that I have taken the steps necessary to take care of someone who suffered due to my mistake. The customer trusted their well being to me and I want to do what I can to protect it..........so I do my absolute best to make the bikes safe and sound and I have insurance just in case I screw up. I see insurance as an important part of the product I sell.

    I of course also have my own assets in mind...........I don't want to lose my home or business or retirement fund because I was human and made a mistake. Both reasons are important to me but frankly the first one is the one that drives me to pay the bill and make sure that my customers are covered in case the worst happens. With any luck I will pay that premium year after year until I call it quits and not a dime of it will have to be used to make a customer whole. I will consider it money well spent.

    I know many will argue both sides of this with passion and logic and there are many good arguments for both carrying and not carrying insurance. Some will say it's a waste of money and some will say that it's money well spent. I think it's money well spent and that the builder has a moral and ethical responsibility to have it. If someone else feels otherwise I respect that. I know I sleep easier knowing it's there.

    Just my 2 cents. Thanks for reading.

    dave

  7. #7
    Andrew R Stewart Andrew R Stewart's Avatar
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    Eric's example of his dad being found responsible for the wronged's loss is kind of what i mean when i say one can be found "at fault" by the courts. But my mind is at ease with how I see my responsibility to my (make believe in my life) customers. Maybe it is how i was brought up as well as what has happened in my life that i have this view. And, yes, there will be no universally agreed view of this topic. But as we do discuss this again and again i hope we do so with consideration to each other's views and not get nasty or start name calling (as I feel has been the case before).

    I understand reddog3's view, even if I don't agree with all of it. Consumers often miss use products that they just shortly before purchased as cheaply as they could. And in the shop I work at we try to inform our customer about the workings/functions of their new bike (or completed repair) but we are human and can't cover every possible manor of use. At some point the end user does need to understand what they're doing.

    But this also applies to the frame builder. He needs to understand how to use the equipment he has and the materials that, together, a frame is made from. If there is a frame failure the builder's loss is just the cost and time to have made a frame (which failed) and hopefully only minor road rash. This loss is pretty minor in the scheme of life and most will just learn from the experience and move on. Maybe this education is to better examine the materials for possible defects before commencing a frame build. If the end use of the frame stays with the builder then this model is much like the consumer who buys a product, the builder bought the materials.

    But this changes when the builder sells the frame to another. The added value to the materials that make up a frame creates another level of liability. What if the builder, in his inexperience (and remember this whole topic was fueled by a beginning builder wanting to build for others right away. I agree that for an experienced builder or a supervised beginner this model can be different) the builder over heats the steerer/crown (or tries to thread a threadless steerer, or...). Now, the builder is unlikely to be criminally charged, I hope we all believe that the builder meant to build a quality product, but his inexperience that led to a possible failure is called negligence. By selling the frame this negligence is now the cause of another's loss, the reason for the negligence is no longer an issue to the one who suffered the loss (or the surviving family/heirs). The wronged one(s) only has their loss to deal with.

    I have heard of some very experienced builders who "fly" uninsured. I haven't heard of them because they had claims that they were found responsible for so for all I know they have never had a failure cause enough loss for there to be a life changing claim/lawsuit. My concerns are not about these builders (although I do have opinions about them...). My concerns are for the new to building guys who read a book, watch an on line video, go out and get a used OA set off Craig's List, buy thin walled high end tubes (maybe even stainless), don't spend the time and money to practice, and then put themselves out to the public as a frame builder and sells frames that might or might not be well built to customers who don't have the skills to be able to tell whether the builder is competent and the frame is safely built.

    I've been doing this on line advise thing for a long time now and one of my constants has been to build for one's self first. When i hear of this not being the case i advise the builder having insurance because it's the right thing to do for his customers. If the builder won't get competent at building before he sells stuff then at least he needs to be able to cover his customer's losses with insurance. We all know the irony that's present, of course. That the beginning builder who can't/won't afford the practice also can't/won't afford the insurance. And this likely also means that he doesn't have the personal assets that can be used to make good the customer's loss. To me this is unethical. Andy.

  8. #8
    Senior Member RPK79's Avatar
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    On top of insurance I would also create a separate legal entity (LLC or Corporation) to hold the business and its assets and to keep myself and personal assets separate from the business. Then you're not at (as much) risk of losing your home, car, etc...

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    Randomhead
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    I agree with Dave Kirk, above, it's just that I like to simplify problems and I didn't have to go that far to come to a solution. Not only do all of us make mistakes, but I'm sure Long Shen and our brazing material suppliers also occasionally make mistakes. Let's say a fork dropout breaks and hurts someone, is the customer really going to be able to reach out to the company at fault? No. So there is a responsibility to be able to get that person covered.

    the LLC issue brings up another point. A sole proprietor that sets up an LLC to protect his assets is in danger of what the lawyers lovingly call "piercing the corporate veil." There is a real question in my mind if the LLC is worth doing. Again, another thing that can be talked about ad nauseam.

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    Quote Originally Posted by Andrew R Stewart View Post
    My concerns are not about these builders (although I do have opinions about them...). My concerns are for the new to building guys who read a book, watch an on line video, go out and get a used OA set off Craig's List, buy thin walled high end tubes (maybe even stainless), don't spend the time and money to practice, and then put themselves out to the public as a frame builder and sells frames that might or might not be well built to customers who don't have the skills to be able to tell whether the builder is competent and the frame is safely built.

    I've been doing this on line advise thing for a long time now and one of my constants has been to build for one's self first. When i hear of this not being the case i advise the builder having insurance because it's the right thing to do for his customers. If the builder won't get competent at building before he sells stuff then at least he needs to be able to cover his customer's losses with insurance. We all know the irony that's present, of course. That the beginning builder who can't/won't afford the practice also can't/won't afford the insurance. And this likely also means that he doesn't have the personal assets that can be used to make good the customer's loss. To me this is unethical. Andy.
    Just so you know Andy, I intend to be fully competent before letting others lose on anything I build. Just so we're clear - you're NOT insured, right?

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    Quote Originally Posted by lesterparker View Post
    Just so you know Andy, I intend to be fully competent before letting others lose on anything I build. Just so we're clear - you're NOT insured, right?
    With all due respect......and this is a serious question...........how will you know when you are fully competent?

    Dave

  12. #12
    Andrew R Stewart Andrew R Stewart's Avatar
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    Quote Originally Posted by lesterparker View Post
    Just so you know Andy, I intend to be fully competent before letting others lose on anything I build. Just so we're clear - you're NOT insured, right?
    "I'm just looking to build a few frames for friends at the moment, maybe just charge them for materials to begin with while I hone my skills." lesterparker

    Sorry to miss understand what you meant with what you posted in another thread (see above). I took this earlier statement to mean that you would be selling your frames while you also gained skills.

    To be clear. I am not insured. I also do not build for others then myself and my wife. Since i don't make my income from building i don't call myself a frame builder currently. (I have joked before that i might be called a gentleman builder). I have been employed a couple of times before and built under their coverage. I have built under my own name for a few unrelated others long ago before i got wise to what I now consider to be the right way to be responsible. But i learned better. My giving advise here (and on other on line groups for many years) is to help others not experience the mistakes I have done and speed up their becoming the builder that they hope to be. If this means building for others then that, IMO, means being able to make good on your mistakes. Insurance is a low cost way to provide this when things go so terribly wrong. Andy.

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    Quote Originally Posted by Dave Kirk View Post
    With all due respect......and this is a serious question...........how will you know when you are fully competent?

    Dave
    Fair question. Im guessing by getting advice from tutors, by lots or practice joining tubes and then seeing what it takes to break the joins under force. If I can break it in a vice = more practice needed.

    Whats the standard way to test the strength of joins?

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    Quote Originally Posted by lesterparker View Post
    Fair question. Im guessing by getting advice from tutors, by lots or practice joining tubes and then seeing what it takes to break the joins under force. If I can break it in a vice = more practice needed.

    Whats the standard way to test the strength of joins?
    I don't have a good answer to the question frankly. It's a fuzzy line to be sure.

    Strength of the joint is of course one of the concerns and testing joints to failure is a reasonable way to get a feel for how much force it takes to get a joint to fail. The tough part knowing how much force a joint should take before failure all the while keeping in mind that it's a force you can't measure but only feel. It makes the entire thing a bit subjective for sure. All that said if you hook some tubes together and test them to failure and the joint peals apart with little force and you know you have an issue.

    In my view strength is fairly easy to get a feel for. You can also take joints (lug or fillet) and cut them open to check for proper penetration and for voids and this is something one can see if you look closely. The thing that is very hard to test is resistance to fatigue. Most bikes don't fail the first time they hit a bump but they fail the 1,000,006th time they hit a bump and this most often isn't a strength issue but one of fatigue. Over time stresses add up and cause the joint to fail. This is very hard to test for but the way most joints fail.

    If the joint is well done and strong it will often be acceptable in terms of fatigue. The usual exception is that the joint was overheated causing issues with the tubing itself and not so much the joint. We've all seen tig joints where the tube fails right next the the beads.......the beads are fine but the tube was cooked causing it to fail over time.

    Testing for fatigue is very hard for the average builder to do. Back in a previous life I ran an extensive testing program using lab tests that ran for hundreds of thousands of cycles taking place over weeks or months. A well built joint, tested properly so that it was a true fatigue test and not a strength test (a big challenge in itself), will last a bizarrely long time..........but overheat the joint and it will pass a simple strength test but fail in only 10% of the time a good joint will last. It's shocking to see a joint that looks just fine fail in hours when a good joint will last weeks in the test rig.

    So what can be done? That's a tough one as I said at the beginning of this block of text. The one sure way is to test the joints for strength until you feel confident that things are cool. Use other brand frames (crashed frames that are otherwise toast are good for this) with a proven track record as a guide. For fatigue you need to get bikes on the ground and have them ridden hard for a long time - and a long time isn't a month. Only when the frame has lasted many thousands of miles will you know that it is OK.

    -------------------------------

    As a slight aside - I had the rare opportunity to learn in a room full of guys that had collectively built many thousands of bikes and learned over time what would cause problems down the road and what should be fine. They would watch over nearly every joint I made. They would look at the condition of the flux as an indicator of how hot it had gotten. If I cooked the bike (and I cooked plenty) it was scraped and would never be sold. It really sucked to have frames that I assumed were fine taken and cut up to see what the joint looked like inside and then put into the recycle bin because I cooked the damn thing. But in time I, like the other guys there, got the hang of it and learned how to build a bike that would last a lifetime. I was lucky. It didn't feel lucky at the time as I was making about $7.50/hr and stood in the same place all day every day with a torch in my hand while others handed me tacked and fluxed frames to braze. I brazed thousands of frames this way over years at that stand.........and it sucked...........and it rocked at the same time. How else can one really learn without repetitions? - it's like anything else..........you can't be good at something you haven't often or for long. It's that whole '10,000 hours' thing.

    So I don't know how a new builder can get a similar level of experince. I now braze a frame a week and if I didn't come into this gig with my past I don't see how I'd get good at it at that production level. I learned while doing 5-10 a day and one learned pretty fast that way. But at my current one a week I braze the same number of frames in a year as I did in less than two weeks way back when.

    I wish I had answers. If I could give all the new builders a few months of what I had 20+ years ago I would do that in a heartbeat. But those days are gone and aren't coming back.

    Thanks for reading -

    dave

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    Quote Originally Posted by lesterparker View Post
    whats the standard way to test the strength of joins?
    en14781

  16. #16
    tuz
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    There are a few places where you can send a frame, fork, stem, etc for fatigue testing. It's not too expensive and I did it some time ago. For a fork, the test is quite brutal (100 000 cycles at +/- 620 N); flexible steel road forks don't do well usually from what I understand (mine lasted less than 1/2 the cycles). The test is apparently better suited for stiffer (Aluminum or carbon fibre) forks.

    Edit. From simple calculations it seems the above test stresses a steel fork (28x19x0.9mm) at the crown/blade up to point that's close to the yield stress...
    Last edited by tuz; 02-06-14 at 01:25 PM.
    homebuilt commuter, mixte, road and track (+ Ryffranck road)
    bla bla blog

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    Quote Originally Posted by lesterparker View Post
    A home for this discussion..

    Do you think it's necessary?

    Do you have it? (if so, where did you buy it?)

    Thanks
    How are those insurances priced? By the number of frames one make? What would be a very ballpark figure per frame?

    Is it possible to get insurance internationally. For instance for builder located outside of USA, and seling worldwide?

    Ad if we speak of responsibility to customer. I think there are some standard nondestructive tests that critical welds have to pass. Like for instance propane tanks. Are there similar tests that can be performed on brazed joints?

    And lastly how in a world can a beginner get pass the first 5, 10 frames? I mean one must have a heck a lot of space to hang all those frames on the wall if they are not supposed for driving.

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    Car insurance, thank goodness for Andrew and the rest of us, is normally heavily regulated to work smoothly. A ton of people carry it, drive and get injured, and if the whole field were not regulated all the courts would do is deal with car accident claims. So the system is pretty much pre-determined.

    I wouldn't say you shouldn't have insurance. What I have said is that the current insurance that I have heard about in the US sounds useless. But even if it is good you will go bankrupt in all likelihood before you ever get paid, because that is how it works. I just wouldn't rely on it to protect me in the case of a claim, but it is worth a try. So then it breaks 4 ways by assets and income (from frame building). The sweet spot being minimal assets, and all your income from frame building. I have high assets and minimal frame related income, so I would be an idiot to rely on it.

    The thing about life long liability is probably an incorporation deal. The corporate entity may well have enduring liability, but there is little reason why you should have it. As far as one's responsibility to clients is concerned, if they know that they aren't getting a warm embrace for life, they are at least clear.

    As far as the viability of the insurance is concerned, if you haven't read and understood the actual policy, and taken it to a lawyer, you don't even know what you are ensured for. There is normally something in there that will disqualify your claim. Often clients talk about how they are able to get insurance, as though that was the end of the story. But insurance isn't investing in a bar of gold, it is a contract, that in the main you haven't read or understood, written by the insurer. I can tell you who wins most of the time.

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