# Liability? Where do you start?



## becikeja (Sep 12, 2010)

This morning I was reading an older post here on the site "Starting a small wooden toy business " http://lumberjocks.com/topics/55618
How sad it is that a discussion on Building Toys immediately went to liability and risk.
I made a rocking horse recently for my grandkid, and since I have had several people offer and give me actual cash to make one for them. It has me thinking about knocking a few of these out on the side as a "small business" and see if I can't sell a few more. Would love to knock these out at a price that young families can afford something decent, but don't want to risk my life savings trying to be a nice guy.

But after reading the post referenced above I am now scared to death. Rocking horses are not exactly without risk. Where do you start to research this? Is it really that bad? Has America really become so litigious you can't even knock out a few toys without being sued?

Yes, I think the Paranoids are after me


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## wapakfred (Jul 29, 2011)

> Is it really that bad? Has America really become so litigious you can t even knock out a few toys without being sued?
> 
> Yes, I think the Paranoids are after me
> 
> - becikeja


My opinion: yes it is that bad, we need tort reform. But as long as we have lawyers writing the laws, they will favor (ta-da) lawyers. One more time: my opinion.


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## FarmerintheWoods (Mar 3, 2017)

Consider setting your business up as a Limited Liability Company (LLC).


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## TravisH (Feb 6, 2013)

> Is it really that bad? Has America really become so litigious you can t even knock out a few toys without being sued?
> 
> Yes, I think the Paranoids are after me
> 
> ...


I seam to put a lot of blame on the average Joe for this not necessarily the lawyers.

To be honest you can jump through all sort of hoops to protect yourself and it really doesn't amount to much unless you have the money to back it up. Even in a LCC there are situations in which you personally can be sued.

I think it comes down to how comfortable you feel with the product you are making and who is buying it.

The problem is too many people have some strange viewpoint on product safety. As a consumer and one time user of a rocking horse. I expected my child to rock and flip over front and backwards and hit their head and smack their face a time or two. I also expected, once a sibling was introduced, we would have smashed fingers and toes. I knew that at some time we would also see it used as a jumping platform. None are offenses that I see as negligent or defective on the manufactures part.


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## mattjrogers (Jan 2, 2013)

If you are selling, just call around and find a liability policy with Products and Completed Operations coverage. Mine only costs $550 per year. If you want to operate a business, there are costs and you should be able to easily cover $550 or it is not really a business at all, just a hobby. In that case, don't worry about the money and just make stuff for fun and give away the horses to friends and family or trade them for services from people you know.


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## johnstoneb (Jun 14, 2012)

Think twice before building to sell. Your hobby will become a job with quotas to meet, deadlines. All of a sudden that hobby you used to enjoy because you could build what you want when you want is gone. Now you're buiding the same items over and over with very little time to try new things. Think long and hard make sure it's really what you want then look into setting up a business and worrying about liabilty etx.


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## bigblockyeti (Sep 9, 2013)

> I seem to put a lot of blame on the average Joe for this not necessarily the lawyers.
> 
> - TravisH


+1! Too many people are comfortable absolving themselves of personal responsibility and letting that fall on someone else's shoulders (think octomom or the crotch coffee lady for example). Even the new Toyota commercials show a couple of young ladies singing as they cruise down the road with the driver clearly comfortable letting driving fall outside of her top ten priorities while behind the wheel, alas, it's OK, the car steered itself back into the lane and away from oncoming traffic. Or the ford commercial where the wife asks the husband if he can back the boat into the water navigating a tight launch ramp, his response: Of course not, that's why I bought a $70K half ton truck to do it for me, life skills are so overrated!

Bottom line is you cash probably make a little money on the side safely (with a good liability policy in place) without assuming unnecessary personal risk. Knowing your customers would almost certainly help, making a few hundred per month and selling them on Etsy and all bets are off. Just my two cents.


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## pontic (Sep 25, 2016)

From one who has been sued a few times it is not plesent. That being said it is what happens in business.
Product liability insurance is based on (mainly) how many units you make and sell per year. A small hobby business like yours they will usually not insure and refer to your home owners policy.
Product liability is based on three pillars. 1)defects in manufacture-you 2) defects in materials-glue ans other fasteners natural products are harder to litigate against. 3) design you or the plans you use.
If the Lawyer can show direct causality in any of these areas they will have a case. Personal damage after a homade repair = no case.


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## Dark_Lightning (Nov 20, 2009)

Remember the OSHA Cowboy? Maybe you could build in some of those safety features. Seriously, as has been mentioned, people nowadays seem to have abandoned their safety concerns for tort gain. Anyway, here's the Cowboy. Enjoy!


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## becikeja (Sep 12, 2010)

> Think twice before building to sell. Your hobby will become a job with quotas to meet, deadlines. All of a sudden that hobby you used to enjoy because you could build what you want when you want is gone. Now you re buiding the same items over and over with very little time to try new things. Think long and hard make sure it s really what you want then look into setting up a business and worrying about liabilty etx.
> 
> - johnstoneb


Definitely staying in the hobby area. I'm thinking more along the lines of building 2-3 a month as my schedule allows. Only selling those after they are completed. I have a 2 rules when someone asks me to build something for them. 1) I get 100% creative license. 2) You can not ask me when it will be done. I guess after this post I will need to add rule number three. 3) You can not sue me.

I guess next step is to look at my homeowners policy. Thanks for the input.


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## knotscott (Feb 27, 2009)

Is there any less liability if you don't sell for cash? Ie: have the people who offer cash provide you with the materials or gift cards for materials instead of cash? Then maybe a gift card to your favorite restaurant or grocery store when complete.


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## DanielP (Mar 21, 2013)

TravisH "I seam to put a lot of blame on the average Joe for this not necessarily the lawyers."

Hospitals and such are now hiring out to subjugation firms. These firms will contact the injured party, ask questions and determine who they can sue. They are completely ruthless.

The injured party could be your best friend and next door neighbor but it will not matter.


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## 33706 (Mar 5, 2008)

Not to mention the severe cost of proving that your finishes and materials are non-toxic. The state of California for example, requires Certification before your craft work can be sold, and the rest of the states are not far behind. Speaking simply from memory, certification from a recognized agency will cost you $3500.


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## BigYin (Oct 14, 2011)

<<the>>
Can't the manufacturer provide certification for their own products. If you make Glue, polish, varnish, oils they must have all been tested bedore sale ?? or is this just CA-Prop65 crazyness ? as in "this product contains freedom of thought and is known to the state of California is known to increase risk of cancer/pregnancy/ trump voting etc"


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## AlaskaGuy (Jan 29, 2012)

Unless I had no money for food I wouldn't build and sell kids "stuff".


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## jonah (May 15, 2009)

> Is there any less liability if you don t sell for cash? Ie: have the people who offer cash provide you with the materials or gift cards for materials instead of cash? Then maybe a gift card to your favorite restaurant or grocery store when complete.
> 
> - knotscott


No. Anything of value exchanged for a good or service is consideration, which is payment. You can pay someone in potatoes, but you still paid them.


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## jonah (May 15, 2009)

Also, protecting people from personal liability is what corporations and LLCs are for. It'll cost some money to incorporate, but it will also shield you from personal liability in just about every case. That's a big reason people incorporate in the first place. Talk to any decent lawyer for more.


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## BurlyBob (Mar 13, 2012)

I'm in total agreement with Bruce from Boise, Id. It's a hobby now and I intend keep it that way. Start building things to sell and it becomes a job. I worked my whole life to enjoy my retirement and my hobbies. I don't need nor do I want the stress of a new job.


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## Carloz (Oct 12, 2016)

Register your business as an LLC. Then any legal actions would be against that LLC not you. And no reasonable lawyer would file a lawsuit against such LLC as they would get nothing from it with exception of ancient Unisaw and scrap wood.


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## Carloz (Oct 12, 2016)

> I m in total agreement with Bruce from Boise, Id. It s a hobby now and I intend keep it that way. Start building things to sell and it becomes a job. I worked my whole life to enjoy my retirement and my hobbies. I don t need nor do I want the stress of a new job.
> 
> - BurlyBob


Not sure why you brought your situation here but different people have different notions of enjoyment. Some just want to be useful.


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## realcowtown_eric (Feb 4, 2013)

if you wanna sell to the public, even if they are yer friends, you better have liability insurance, I'm in Canada, less litigious than the USA, but still liability nsurance is a must. I started out years ago with 1 mil, but I think 2 mil is more the case these days. For what it costs, (me about 85/mo, it ain't worth losing your house/financial status over.

Wanna go into business, better be prepared to be in business, and that includes local bylaws/land-use regulations-believe me lots of suprises there. My home town of Calgary has about a thousand pages of land use bylaws

Operating without a business licence here in Calgary can cost me 5 figure fine and/or a year in jail.

You gotta weigh the risk to you and how much risk yer willing to accept, but remember if yer operating out of your home allit takes is one nasty neighbor and yer potentially in the legal fray bylaw wise.. Been there, done that. and only one lawsuit, however frivolous can cost megabucks to defend yerself,

I dunno if those observations make sense to you, but there is a real and substantial risk by operating "off the radar" cause onece it catches you, the sky can fall. It ain't just in the "litigious USA" and Trump ain't gpnna relax regulations on artisans anytime soon eh? although he may relax enforcement of ohsa laws on small business, but don't hold yer breathe nless you got a lobbyist that belongs to his Florida club.

bottom line is if yer in business, yer in business and have to pay the costs assess the risks to you and yours.

If it's a hobby, and you don't want to pay the costs of being in business, keep it a hobby.

Good luck. wiegh the risks. and decide.

Regards 
Eric

Facts of lifematter buddy.


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## pontic (Sep 25, 2016)

Could'nt have said it better Eric.


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## clin (Sep 3, 2015)

Not sure if it's been mentioned, but don't confuse general liability insurance (commonly called slip and fall), with product liability insurance.

General liability protects you from things like a customer slipping on a wet floor in your shop and hurting themselves. This will NOT cover liability for the products you produce.

I have no idea how hard it may be to get product liability insurance for woodworking products. But in the areas I've been involved in it is practically impossible, since UL approval seems to be required to even get out of the starting gate.

As I understand it, product liability insurance only protects while the policy is in force. Sell your last widget, stop your coverage, and 2 years later there's a problem, you are NOT covered anymore.

So to some degree, you need to keep a policy in force for the rest of your life, or at least until any reasonable chance of a liability claim has passed.

As always, best to check with insurance professionals.

Also, you need to keep perspective. You cannot protect yourself against everything in life. It's one thing to sell a million of something a year vs selling a few hundred. Also, use some common sense and do NOT make an unsafe product. Don't sell a toy made with small parts a child could choke on. Don't make a chair that is one weak glue joint away from total collapse. Don't sell something that invites trouble like a bow and arrows.

And as mentioned, incorporating a business adds a layer of protection.


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