I in the planning stages of getting my FFL. im going to be looking into insurance this week. im curious or actually looking for suggestions on how much coverage one should have. I guess my worries, lies in that I have no idea what the insurance will cost, or if I will even be able to make my very small scale shop worth while. I don't want to work just to pay the insurance, and I dam sure wont work without any. lee
-
Having trouble using the site?
Contact support
Gunsmithing FFL/Liability insurance. how much should one have??
- Thread starter skeetlee
- Start date
Second step is to get an Umbrella Liability Policy through your auto carrier. Inexpensive, about 2-300 for a million in coverage. That is a personal policy, but after the lawyers consume the business payouts, you're next.
Much easier and more profitable to sell hot dogs out of a road side hot dog stand. Less scary too.
I'm a gunsmithing student and don't yet have an FFL, so I can't offer any advice on the insurance aspect.
However, I'm a CPA and would like to offer some information many small business owners are not aware of regarding limitations of LLC protections.
Organizing as an LLC is typically a good choice for small businesses, and it does offer some protection for your personal assets if you administer your business correctly but many people do not.
Please be aware that there are multiple circumstances in which a court will "pierce the corporate veil" - meaning that despite being organized as an LLC, they decide your business and personal assets are actually one and the same. They can use your personal assets to satisfy business debts.
The number one way small businesses screw up here is by commingling personal and business assets, expenses, etc. For example, paying personal bills out of the company checking account or vice versa. You can also increase your vulnerability by failing to follow certain business formalities like recording important business decisions in meeting minutes, etc. Here's a pretty good summary of the issues you should be aware of if you're operating as a corporation or LLC.
Piercing the Corporate Veil: When LLCs and Corporations May be at Risk | Nolo.com
Just understand that you can't use a fire and forget strategy to protect your personal assets with an LLC. You will need to follow certain practices in the day-to-day operation of your business or you'll be at risk of having your LLC status ignored in a legal action.
So, the bottom line is definitely don't operate without insurance, regardless of how you organize your business.
However, I'm a CPA and would like to offer some information many small business owners are not aware of regarding limitations of LLC protections.
Organizing as an LLC is typically a good choice for small businesses, and it does offer some protection for your personal assets if you administer your business correctly but many people do not.
Please be aware that there are multiple circumstances in which a court will "pierce the corporate veil" - meaning that despite being organized as an LLC, they decide your business and personal assets are actually one and the same. They can use your personal assets to satisfy business debts.
The number one way small businesses screw up here is by commingling personal and business assets, expenses, etc. For example, paying personal bills out of the company checking account or vice versa. You can also increase your vulnerability by failing to follow certain business formalities like recording important business decisions in meeting minutes, etc. Here's a pretty good summary of the issues you should be aware of if you're operating as a corporation or LLC.
Piercing the Corporate Veil: When LLCs and Corporations May be at Risk | Nolo.com
Just understand that you can't use a fire and forget strategy to protect your personal assets with an LLC. You will need to follow certain practices in the day-to-day operation of your business or you'll be at risk of having your LLC status ignored in a legal action.
So, the bottom line is definitely don't operate without insurance, regardless of how you organize your business.
Last edited:
Here is my situation.
We own 500ish acres of prime farm land. My home is my shop. well the pole barn is the shop. same address. Im not sure if that is a complication or not??
I don't intend on doing lots of work at all. If I can cover my expenses through out a shooting season, then my goals have been met. I don't need the income from this adventure. I really, really enjoy barreling my own actions, and I feel I have a real knack for this stuff. my father is a retired machinist so he has help me a lot. My barrels have won benchrest matches, so I know I have a little something to offer.
Im not interested in advertising, or doing a lot of work for folks I really don't know. I have had several request from people I do know, and I have to turn them down, if it means there rifle has to be on my property.
So basically I could be referred as a hobbyist/barrel smith. I am going to go to gordy's school here before long, as I would like to do some action work, and stock work. Nothing to major.
Im not even sure yet if I can get an ffl or keep an ffl if im not going to go balls out and show profit? Im looking into all this. I don't want to have to work, just to pay a big ass insurance premium.
Most important thing is that I never put the farm in harms way. That farm takes care of us, and it will never leave the family. I need to make sure, that nothing ever happens to it!! Im sure of my work, but I cant be sure what folks may do with my work. Lee
We own 500ish acres of prime farm land. My home is my shop. well the pole barn is the shop. same address. Im not sure if that is a complication or not??
I don't intend on doing lots of work at all. If I can cover my expenses through out a shooting season, then my goals have been met. I don't need the income from this adventure. I really, really enjoy barreling my own actions, and I feel I have a real knack for this stuff. my father is a retired machinist so he has help me a lot. My barrels have won benchrest matches, so I know I have a little something to offer.
Im not interested in advertising, or doing a lot of work for folks I really don't know. I have had several request from people I do know, and I have to turn them down, if it means there rifle has to be on my property.
So basically I could be referred as a hobbyist/barrel smith. I am going to go to gordy's school here before long, as I would like to do some action work, and stock work. Nothing to major.
Im not even sure yet if I can get an ffl or keep an ffl if im not going to go balls out and show profit? Im looking into all this. I don't want to have to work, just to pay a big ass insurance premium.
Most important thing is that I never put the farm in harms way. That farm takes care of us, and it will never leave the family. I need to make sure, that nothing ever happens to it!! Im sure of my work, but I cant be sure what folks may do with my work. Lee
I'm in a similar situation to you. I'm going to school and working to improve my gunsmithing skills but I'm gainfully employed elsewhere and don't have expectations of this ever being more than a self funding hobby for me, at least until I retire from the rat race.
The difference between your goals and mine is that for now I just view it as another expensive hobby. My last hobby was flying airplanes so if I lose a little money operating the business because of the cost of insurance, I'll still be spending less on my current hobby than my last hobby.
I'm not a lawyer but I think you're always going to be exposing yourself to a certain level of risk doing gun work. Sounds like you have a lot to lose.
Stick to it as a hobby and do the work for yourself. If a buddy comes along and wants something done, chain his behind to a chair in your shop. So long as he's present and your not charging him then your not subject to the FFL stuff. (unless of course you start logging in actions overnight, etc.)
You can work on your own stuff and/or a friend as a hobby all day so long as you don't keep stuff overnight and your not buying/selling guns or shipping them across state lines.
Again, do your own homework and decide what's best for you, but if your a hobby guy, treat it as a hobby. You'll likely get more enjoyment out of it anyway. Trying to stay low key in this trade is near impossible. Word travels fast.
Good luck.
C.
You can work on your own stuff and/or a friend as a hobby all day so long as you don't keep stuff overnight and your not buying/selling guns or shipping them across state lines.
Again, do your own homework and decide what's best for you, but if your a hobby guy, treat it as a hobby. You'll likely get more enjoyment out of it anyway. Trying to stay low key in this trade is near impossible. Word travels fast.
Good luck.
C.
So I can't borrow my buddy's gun and keep it overnight. Where is that written? I'm being a smart ass, and do perfectly understand the FFL rules. If you're not doing it as a KNOWN source of income, there's no need for an FFL. It's one of the questions on your FFL application. Therefore, no advertising, no undercover loitering as a gunsmith to troll for business on forums, no offering yourself as a gunsmith at local ranges, and do not go printing up business cards for yourself. If you are so stupid as to telling on yourself for making a couple of bucks on a little work here and there to cover the tools, and materials used to help others, then what can I say.
Back to the opening statement, unless you are going balls to wall to make as much money as you can doing gun work, forget the whole FFL business idea because it's not worth it part time. Ask me how I know this.
By the way, no one, and I mean no one can dictate who your friends are. I have no shortage of friends.
Back to the opening statement, unless you are going balls to wall to make as much money as you can doing gun work, forget the whole FFL business idea because it's not worth it part time. Ask me how I know this.
By the way, no one, and I mean no one can dictate who your friends are. I have no shortage of friends.
Last edited:
All of this is great intel from knowledgable sources, but how much does this liability insurance actually cost (ballpark) if one decides to go balls to the wall and start up a business?
You want to know why you're not getting any answers?? I would bet that's because most guys don't buy it. It's probably expensive, and hard to find. I'm sure most insurance company's don't want to have anything to do with firearms. If I wanted to find the price and availability of such insurance, I would ask the pros that sell it. They would be able to give an accurate rate based on what it is that you want to cover. Not everyone will have the same needs.
Building rifles for others is risky business at best, because you know you did a great job on your end, but once it's in the hands of someone who might be a bit irresponsible and overloads a case with the wrong powder, and hurts or kills themselves, you're fucked if they want you to be. You really think that because you have a very well set up LLC that they will stop there? No, they won't. They may not get a lot from you, but you will lose a lot to a lawyer to defend you.
I have a basic General Liability policy from A.J. Gallagher in Baton Rouge. The policy runs about $1800 for 6 months. I think this answers your question in the OP.
As far as the decision to get your FFL that's up to you but if you're wondering about insurance for coverage of your business....... The statement alone says that you're going to start a business. What do people start businesses for? To make money. So if you have a business that works on guns then you need an FFL. If you're going to work on friends stuff then you don't need a business nor do you need business insurance. That's just my $0.02.
As far as the decision to get your FFL that's up to you but if you're wondering about insurance for coverage of your business....... The statement alone says that you're going to start a business. What do people start businesses for? To make money. So if you have a business that works on guns then you need an FFL. If you're going to work on friends stuff then you don't need a business nor do you need business insurance. That's just my $0.02.
Barely half of what a semi-decent policy for a 4k sq ft shop in a strip mall in Phoenix AZ costs.
Not an FFL, but did run a small consulting company for about 13 years.
What we did with the office space in the house was:
1) We leased the space to the company. And the company paid a monthly lease. We did the whole Schedule thing on rental property to properly account for the income to us.
2) We organized as a C corp for various reasons. One side benefit was the ability to expense up to $10,000 per year in capital equipment costs, then depreciate that same equipment. So you basically deduct it twice.
3) Talk to your insurance company, you may find bumping up the cap to be not very expensive. Getting the insurance is the expensive part, upping the limit can be a LOT cheaper.
4) Get a personal umbrella policy as mentioned. Although this is a good idea to anyone. When you look at current costs, if you were yu hit someone with your vehicle, the medical costs could easily run over a million.
What we did with the office space in the house was:
1) We leased the space to the company. And the company paid a monthly lease. We did the whole Schedule thing on rental property to properly account for the income to us.
2) We organized as a C corp for various reasons. One side benefit was the ability to expense up to $10,000 per year in capital equipment costs, then depreciate that same equipment. So you basically deduct it twice.
3) Talk to your insurance company, you may find bumping up the cap to be not very expensive. Getting the insurance is the expensive part, upping the limit can be a LOT cheaper.
4) Get a personal umbrella policy as mentioned. Although this is a good idea to anyone. When you look at current costs, if you were yu hit someone with your vehicle, the medical costs could easily run over a million.
Can't offer much on insurance. I don't think any advice you get here will help you much if you screw up a build and hurt or kill someone.
I can offer something on the ffl. DON'T GET IT!
Unless you keep a receiver from a ffl holder overnight, you don't need one.
No need to give the fed the key to your front door if you don't have to;-)
I can offer something on the ffl. DON'T GET IT!
Unless you keep a receiver from a ffl holder overnight, you don't need one.
No need to give the fed the key to your front door if you don't have to;-)
No offense meant...........(at all!) but you really won't obtain meaningful advice for free on the Internet because none of us know your intentions with enough detail to really provide correct advice. You need to speak to an insurance agent/broker that specializes in commercial lines (general liability, contents, errors and omissions, etc.) Your cost will be related to your expected revenue, assets insured, and potential liability. In similar fashion you will want to speak to an attorney to create your business entity that best meets your interests, personal control, tax management, asset protection, etc. The last thing you want to do is risk that 500 acres of prime farmland because you wanted to do a little gunsmithing on the side.
I would contact the NRA Business Alliance and request a quote NRA Business Alliance - Benefits depending on what you are looking for the liability part will be around $800. If you want liability plus building coverage and tooling coverage it could be more than $2000. Another place to request a quote is Joseph Chiarello & Co. Inc. Gun Insurance Home, Welcome There again Liability will be around $800 anything else you add will increase the premium.
I am no gunsmith but I know insurance.
Talk with your homeowners agent. Lawsuits that come from business pursuits might not be covered by your homeowners policy.
On your commercial policy remember that all policies do not offer the same coverages. Find an independent agent that you trust and let him/her find the best carrier based on what coverage you want.
Don't skimp on the umbrella policy.
Feel free to pm me with any particular questions and good luck with your business.
Talk with your homeowners agent. Lawsuits that come from business pursuits might not be covered by your homeowners policy.
On your commercial policy remember that all policies do not offer the same coverages. Find an independent agent that you trust and let him/her find the best carrier based on what coverage you want.
Don't skimp on the umbrella policy.
Feel free to pm me with any particular questions and good luck with your business.
The NRA insurance program is for general gunsmiths. If you true actions, chamber and re-barrel you best check with Joseph Chirello (NSSF endorsed) or Lloyds of London. Insurance cost based on work volume, 4% of gross revenue after base fee is paid.
Nat Lambeth
Nat Lambeth
Similar threads
