Thread: Insurance

What a sod.

I would have thought that to insist you were commercial they'd have to show you were charging GST on what you sold, claiming GST input tax credits and paying income tax on your earnings.

However, the Victorian Woodworkers Association offers insurance to members and it might be worth reading through all the details here

I am looking into Victorian Woodworkers Association at the moment; I need around $25,000 to cover the workshop and $65,000 to cover its contents hopefully this is not too much. I have put most of my money over the years into my hobby not the household stuff in fact all the shed needs is a bed and I’ll be set LOL

I'm confused - the insurance assesor told you that you'd sold a few items, or you told him you'd sold items???

How could he whether or not you've sold items (unless you've sold them to him ).

I guess if you are claiming depreciation on your tools, or have a registered ABN that's a different story, but just because you own commercial quality tools, that's no proof you've sold a damn thing!

I guess there's a lesson here for us all - email your insurance company direct, and request confirmation (in writing!) that your items are covered, and the conditions of that cover.

If it's purely a hobby, even if you sell some of your items, it is still a hobby and not a commercial venture and should not be classes as such by your insurance company unless you are a registered business with an ABN You are allowed to sell a reasonable amount of your hobby produced items without paying income tax or collecting GST. I don't know what gives this insurance company the right to make the assumption you are a commercial business other than the quality tools and machines you have in your shed which is something that a lot of the guys and gals have who belong to this forum.

Insurance companies will try it on if they think they can get out of a claim.

It is common to see them worm out of smallish claims because they know the majority of people will not think it worthwhile taking them to court for an amount that will be cheaper than the legal fees.

Having said that, my brother has a claim against his insurer for 1M as he is now permanantly unable to work. He has been paying these premiums for the last 30 years and has scans and medical proof that he is unable to work and proof he will not get any better.

Insurance companies

Originally Posted by Soredust

Having said that, my brother has a claim against his insurer for 1M as he is now permanantly unable to work. He has been paying these premiums for the last 30 years and has scans and medical proof that he is unable to work and proof he will not get any better.

I've been down this road for an even larger sum, but the insurance company introduced a clause after the fact and also turned up a surgeon whom I had sought a second opinion from (I saw him for all of thirty minutes and he didn't examine me let alone operate on me) and I omitted to mention him in my disclosure. They refused to pay out. I spent about 18 months pushing an ombudsman to sort the matter out. Eventually, the insurance company refunded my premiums. Had I known, I would have been better off investing that money in antiques or stocks. I wish your brother good luck!


I have also had a similar experience with car insurance (a 10 month old Pajero write-off) and some of my personal belongings that I brought with me to Australia that were pilferd/lost/damaged. I have no faith in insurance companies, but without insurance, courts often take the view you are being reckless and on the make.

Whilst it is nice to have a go at insurance companies, and often they deserve it, the question that comes to my mind is what kind of insurance do you have.

If it is an ordinary household policy than your tools are not covered, notwithstanding that the value is included in your policy total, because they are not normal household items and there normally is a limit on other (including hobby) things. Similarly extensive collection of jewelry is not covered unless specially itemised in the policy.

So if you want your extensive and expensive workshop and tools covered then you have to advise details to the insurance company who will then give you a special quote covering the risk.

Further the fine print in an insurance policy will tell you that in the event of any claim they can reject your claim and refund the unexpired portion of the premium if there is a lack of full disclosure.

Never assume you're covered read the policy.


Peter.

Just as an aside about what is and isn't considered a business. I have a business registration. But, because i don't earn 0ver $50K it is not considered a commercial concern by the taxation department. I do not submit BAS statements or Tax inputs.

For them to claim you are conducting a business the onus is on them to prove that you are, not for you to prove that you aren't. Demand it in writing and have a lawyer look it over.

Originally Posted by Mike Busby

But, because i don't earn 0ver $50K it is not considered a commercial concern by the taxation department.

Never confuse tax laws with commercial law, because they can and often are different.

Your advice to sort it out in writing before hand is excellent. Will save lots of possible headaches.


Peter.

Just remember with insurance and all legal documents

The big print giveth
and the small print taketh away.

Hi Darrencch

There's lots of us have been down this track before. I have cover of a sort for $80k machinery at written down values not replacement values , tools,and timber. Cost $1240. The cover offered is highly qualified by conditions and effectively excludes theft beyond a very low limit, I can't spray finish except in an approved enclosure, I have to store flammable goods in an approved enclosure. I have to have mandated fire equipment, dust extraction on each machine and clean all horizontal surfaces daily at end of working day plus I have to have an external electrical supply interrupter. I am required to have smoke alarms. The cover does apply to loss to fire from external sources and to fire starting from internal sources if the conditions are adhered to. The former of these two is by far my greatest risk element as I live in a bush environment.

You need to pick the risks you feel you can afford to cover and if you want theft cover then spend your money on fortressing your workshop not on buying insurance. See a broker re your own needs. Issuing cover for joinery shops isn't popular with insurers. Don't get wound up on the semantics of meaning of 'commercial' if you've got big values then you will be deemed to be a commercial risk.

There's thousands of wood working folk out there who mistakenly think their gear and timber is covered by household contents insurance. It isn't as I discovered when I submitted an itemised valuation of my things in an effort to allay any possible argument in the event of a loss occurring. Good luck.


Old Pete

Why do you think Insurance companies always have the biggest buidings in any town/city.My ex son in law worked for one (shall remain nameless) he said the ratio to payouts as against premiums was 20 to 1 that is for every premium received they only paid out on one in twenty.
Its legalised gambling.

Working in insurance, I can tell you that over a 7 year period, most insurers pay 100% of collected premium back in accepted claims. They make their money on investments earned while the money is in their coffers.

Having said that, some insurers are better payers than others, and a few border on dodgy.

The bottom line is, if you have something of value and you want it covered, then get it insured. Household cover may not cover your tools or may cover them to a nominal amount i.e. capped at $1000,00. If you have a couple of Lie Nielsen planes, your $1000 can be carried of in about 10 seconds.

Like anything, decide whether you want to spend the money on a seperate policy or take the risk. It's up to you. A phone call to your insurer will help you know where you stand.