Home Theater Liability Ins. For Installers

okiepolkie

I am starting my own home theater business(consultation, sales, and installation) and I am need of some insurance advice. I am aware that installing wire and such into a home has some liabilities with it(not my house, don't want to pay for theirs). So I am in need of liability insurance that will cover any mishaps(such as a stray spark that burns down the house).

Does anyone know if there is liability insurance for this particular application. I know some of you guys do installations for companies, but do you happen to know what type of insurance is recommended for this.

I've got some local shops I could ask, but I don't think they would be very open to talking about it since I would be competing business wise with them.

If it is an large cost, I may just do sales until I can afford the insurance.

Any help would be appreciated.

Zach

Frank Z

Your best option is to contact a few commercial insurance brokers and get quotes for coverage. Be sure that you tell them exactly the type of wireing you're going to be doing (Low-Voltage only). Get more coverage than the minimum just in case. If you use an electrician for any hi-voltage wiring make sure that they are licensed and insured as well. They must provide you with a copy of their General Liability Insurance Certificate before doing any work for you.

okiepolkie

Thanks Frank.

Do I need to get a low-voltage subcontract license as well?
My primary goal is to do things right, not just scrape by.

I'm in the process of getting my state sales certificate right now, but I want to know as much as possible before I take any other major steps.
I'll be able to sell and install several good brands, including our favorite.

Just hoping to get everything I need legally before the hollidays get in full swing and I get some business.

okiepolkie

I probably will be installing my stuff as well their own items. Will this make a difference on the insurance end of it?
I would think it would, but since I don't know, I'm asking questions.

okiepolkie

Thanks Zero,

I'm meeting with a friend this afternoon(small business owner) to work some of this these things out further. Since I am new to the business aspect of audio/video, I am need to be aware of what to look for when I go to my local offices. I am not sure what type of city license I'll be able to get. I doubt we have a specification for this type of work. I need to be able to at least assimilate what I will be doing with another profession. That may be my only way to get what I need.

Thanks for the help guys.

Probably more questions later.

swerve

Don't know much about insurance other than more than the minimum is always a good thing. But best of luck to ya!

-Adam

Frank Z

Do I need to get a low-voltage subcontract license as well?

In my area a license is not required for low-voltage wiring. You should check with the building department in your area to be sure.

Contact your local BBB, they often offer classes for small business startup's. You'll need to apply for the applicable city/county/state sales tax licenses. Contact the State Department in Tenn. regarding incorporation. Do not incorporate as a C Corp, you'll end up paying double the taxes. Look into becoming an S Corp, or even an LLC.

SCompRacer

I've done business as an S corp and Sole Proprietor. Some of this info could be incorrect if laws have changed. Some of my opinion may seem dark, but I've seen the best and worst in people and just put it out there for you to ponder.

Some folks go the S corp route due to the tax advantages and/or the liability thing. If you get sued or go chapter 11, they can only go after the corp assests. That's fine as long as you watch what the corp buys for you personally. Lawyers dig for stuff like that to try and make the S corp thing mute. Suppliers that extend credit will ask you to sign a personal guarantee if you’re an S corp so they have recourse if you default. You need to document your quarterly meetings as an S corp too, even if it's with yourself. Sole Proprietor was much simpler. Ask questions.

It seems people will sue at the drop of a hat these days. If your married, don't put your wife’s name on the business and if you own your home, make sure the title on the house is in joint tenacy. The idea here is to protect your assets in the event you were to get sued; half the equity is yours, half hers.

You'll find liability insurance isn't as bad for a traveling business versus a fixed one. Having a parking lot and building drives the rates way up. IIRC, I was paying like $200 a month for 1 mil in coverage back in '94 for a mobile fleet repair business.

I've never been sued but have had two different attorneys and accountants give me different advice. Get all the facts you can and make your choice. Good luck in your endeavor!

okiepolkie

So far I've learned the following things:

At least 1 million dollars in general liability ins(required to be a member of CEDIA-which I will consider later)
Some type of professional ins in case a spark burns a house down.
I am going with sole proprietor to cut down on complication.
Still working to see what licenses are required.

I've learned more, but that is the short of it.

mantis

okiepolkie,
Are you planning on hiring guys with experience or trying to build? How experience are you at Install? What kind of work do you plan on taking on? Simple Home theater and simple multiroom still exsist but thats not where the bussiness is at today. Today networking devices are huge and growing faster then weeds.
Also control is the single most Important factor of any job. Most people who are into this hobby don't understand the total ins and outs of doing it for a living.

Do your homework before you commit. You could fail very easily and lose tons of money. Trunk slammers( not saying you are going to be) are slowly fading away. Shafty work isn't excepted like it was years ago.

I have been in the bussiness for over 6 years and have been offered positions from many audio video outfits tristate( Pa, New jersey and Delaware) I have seen and met many small bussiness owners and alot of them go under not being able to keep the bussiness do to the guy down the road....

Good luck man and I wish you well. This is something I have been thinking of doing. Owning my own Install company. I have 2 kids, wife, house , and all that going on so I have alot to risk. But that doesn't stop the possibility..

Dan

exalted512

why dont you do a car audio and home audio shop? especially if theres another HT shop in the area. i work at a car audio shop and have a few friends in a shop close by that do home audio and car audio...car audio is 75% of their business, but then again-i live in a college town. just a thought
-Cody

scottnbnj

local insurance agents are usually a pretty friendly lot, i wouldn't hesitate to talk to them about what you want to do.

i wouldn't be surprised if there are several catagories that fall close to the type of business you want to do. insurance companies are pretty good at getting to the nitty-gritty of things. you might even have to help your agent come up with different terms to look for if it's something they haven't sold much of.

gross business receipts/income/payroll will be a factor in how much you pay. you could ask what the receipts cut-off is for the minimum premium on that type of policy. while the book's open for that, ask for an idea about how steeply premiums go up as sales increase. when the agent asks questions, ask how your answers will affect your policy, premiums and coverage. the answers might have something to do with what types of jobs you take on. when you get a policy in your hands, read it and go back and ask questions about it. how an agent deals with a million questions might tell you something about how they'll deal with real problems with a job or insurance company down the road. and like frank said, if you think you'll ever have sub-contractors, like cabinetmakers, carpenters or electricians, or be one yourself, ask the agent to explain what a 'certificate of insurance' is.

i think at some point i had to register my business with the county clerk. you'll probably want a bank account in the business' name too, or at least add a 'dba' (doing business as) to one of your personal accounts, but, as scr said, not on a joint account with your wife.

knowing the cut-off for getting yellow page ads in the new phone book might be helpful too.

good luck.

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okiepolkie

I've already got a full time job that pays the bills, so opening a shop up right now isn't a necessity.

I'm initially going to be consulting, selling, and installing home audio/video gear through local advertisements and word of mouth. I've already installed a nice system in the most prominent home builder's house, so I already have several jobs lined up from word of mouth. My main market will be new home construction and a few retrofits here and there.

The receipt cutoff is a minimum of between $40000-50000. I don't think I'll be making that much for the first year, or ever with my business plan, but that is what I'm going to have to go with.

Thanks again for all of the advice everyone.

Got to go to bed now.

okiepolkie

I got a quote from a local ins. agent on Monday. I described the details of what I would be doing and he found a policy that matched up pretty good. It is more detailed than this, but here is a general breakdown:

$1,000,000 liability limit

$5000 job site medical insurance

$50,000 fire insurace

$500 deductable/claim

$858 per year

I was hoping for better coverage for cheaper, but I know this isn't that bad either.

BTW, I sent off for my sales tax permit today. This will give me my certificate of sales/business license as well. I got my EIN last Friday just in case I need it for business purposes.

I chose to do this as a sole proprietor to keep as simple as possible.

Hopefully there will be more news within the next few weeks. I'll keep everyone updated with progress and questions.

Frank Z

That seems awfully high for the coverage your getting. I pay less than $700/yr and I deal with boilers (water & steam) High voltage wiring, and natural gas. Shop around, you can do better.

scottnbnj

for sure frank, the best insurance against paying too much is shopping, and it's good to see how different agents put policies together. i mean,uh, different agents might steer you towards different classifications and balances of coverage.

for okie's price though, i'd pay that for a 300k policy. but then, i have the full array of hazards, with ladders, open roofs, decks, walls, power tools, nail guns, subs, large volumes of material, all set up in living areas of customers' homes,.. and i'm in nj.

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