Re: [TCML] liability insurance, etc.

[Jim Lux <jimlux@xxxxxxxxxxxxx>]

-----Original Message-----
>From: David Rieben <drieben@xxxxxxxxxxx>
>
>Hi Peter, all,
>
>I too have never figured on getting any kind of return on
>my 'investment' into this hobby, besides my own personal
>enjoyment ;^) If I can 'turn a buck' with it here or there,
>that's icing on the cake but there's no way that I would
>ever recoup even a fraction of the thousand$ of dollars
>that I've spent on this hobby through the last 20 years.
>As Jeff has pointed out, when you start making money
>with it, then you are considered a professional and that
>opens you up to a whole lot more liability, at least here
>in the USA it does and I'm sure it's similar their in Austra-
>lia.

It's actually more "being paid" not necessarily "making money" (i.e. having a net profit) that triggers that pro vs amateur thing.  This is a tough lesson a lot of folks learn when they turn a hobby into a business.


> BTW, are there any resident attorneys on the list that
>could offer a bit of courtesy legal advise on these issues ;^)?
>Of course US based attorneys' advice could really only
>be applicable to US based coilers. The laws are often a
>little different even across state lines within the US so
>maybe that idea wouldn't work too well after all.

 Besides,
>I haven't ran across very many lawyers that are willing to
>dole out FREE legal advice ;^0

It's that "liability exposure" thing.  Attorneys are peculiarly well suited to see the dangers of such a thing.  Think about this:
a) Say you're a sole practitioner lawyer.. You put some advice out on the TCML as an attorney.  Someone follows the advice and things "go wrong"..Someone decides to sue.  Your E&O insurance carrier handles it, but your insurance is probably history after that.  Oops.. you're unemployed.

b) Say you're practicing in a big firm.  If you're an associate, the opinions would almost certainly need to be vetted by a senior partner, because the partners' personal cash is on the line. Easier just to say no.

c) Big Firm, but you're a partner.  You don't have enough time to be fooling with tesla coils.<grin>


Umm.. and for what it's worth, the same applies to architects' and engineers' liability coverage. The typical policy costs about $2K for a million dollars coverage.  Say you want to do some work on that $100M skyscraper.  Think your $1M cover is going to handle much if some disaster occurs and your name winds up on the defendants list?  Nope, especially if you're in a strict liability state (where all are jointly and severally liable.. no apportioning of damages). That's why A&Es on big projects get "project insurance" through the developer and are "named insureds".  No A/E has the resources to handle the potential downside, unless you are single and asset free. (one reason why bold designs come from young-uns) 

A small A/E shop might do jobs like residential mods, a strip mall and such, because the odds of incurring more than the $1M liability if everything goes wrong are fairly low.  Mostly it has to do with the interaction of the insurance carriers on both sides, etc.  For instance, what you're really paying for on your insurance is for legal fees to defend the case and drive to settlement, often with the carrier on the other side. Most engineers do a good job.. actual errors are unusual, so the usual claim has more to do with negotiating an understanding of what actually happened, and a realization by the plaintiff that they got bit by bad luck, and that the engineer isn't actually at fault, or a negotiated settlement of partial responsibility.  And, the deductible on these policies is pretty big ($5K -$10K wouldn't be unusual), so no A/E is going to be very cavalier.


When I used to work in the special effects business, this is something the owners sweated on a daily basis, and when they got married and had kids, I'll bet they sweated it even more.  I'd say that a significant fraction of the fax traffic when we got a job was insurance certificates flying back and forth (the other half would be descriptions of what we were actually going to do, quotes, schedules and the like).   I don't even want to contemplate what kinds of premiums they were paying, but they were probably pretty hefty, in terms of a percentage of the income from the jobs.


Jim

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