insurance, please read

[Mike in NY]

Was down talking to our state farm agent on our homeowners policy about a claim we filed last yr.. Then mentioned we needed additional coverage for addition to house we added this yr. And as a postscript too him I pondered too myself; aloud though, about how I thought our new sugar house equiptment and inventory should be valued at about 10 grand replacement value.
said ins agent asked me" did you sell the syrup???"
sharp as a tack ;I eventually came up w/ the answer he wanted to hear. uh no.... I like pancakes twice a day w/ lotsa syrup on em.
and oh yeah I gave away a bunch syrup as Christmas presents.
thats my story and I am sticking too it!


only reason I mention is that a neighbor lost his sugarhouse this summer due to big ole' maple crushed the shack into a big piled of smoooshed up stuff

[Dill]

I would recommend that anyone who is selling syurp get a true farm policy or at least add a "i farm endorsement" to their homeowners. The big national guys are probably not going to touch it. Also the point about your equipment is valid. Again a farm policy or a business equipment rider will cover it.

For full disclosure I'm an insurance agent, who specializes in farm insurance.
So if you have question post them up. I've found the state "farm" etc people are not likely to help you with this stuff. Granted I only write in the state of NH, but might be able to steer people elsewhere in the right direction.

[red maples]

Ok excellent!!! So I am in the process(actually its just about done) setting up LLC. for the maple "business" now my lawyer suggested that we get on top of our car insurance and homeowners insurance an umrella policy for our property and liability insurance for the maple sales etc. and business insuance to protect us from a fire, big maple smooshing things etc. I went with the LLC because even though I don't of anyone getting sick from maple there are sue happy people in this world that are out to get anyone that they see fit. And even though the syrup industry is looked after by the dept of Ag. It is still an ingestable product which in my mind as well as the lawyer's is can be risky if your not protected.

So I guess my question is did I do everything right???

and do I still need to to add the farm endorsement to my homeowners or no?

I did everything I thought I should do for my own protection as well as my estate too, and by recommendation from the lawyer.

[Dill]

Will the syrup be labeled as Red Maple LLC or in your name?
Who owns the sugar house and related property the LLC or you?
If your selling at farmer's markets aren't they asking you for proof of insurance?
What I've seen is LLCs are preferred by lawyers since they get to charge to set them up. While they can serve a purpose I tend to see them used incorrectly.

[PerryW]

You might want to rethink the LLC. I just heard a rumor that New Hampshire is proposing a tax on LLC, that amounts to a 5% income tax. I had an LLC for years for a small Autocad Drafting business. I finally got rid of it because of the paperwork and $100 annual fee.

[Stickey]

LLC separates your personal assets from those belonging to the business, giving the owner some protection from law suit. I only go on the advice I get from my lawyer and accountant.


You might want to rethink the LLC. I just heard a rumor that New Hampshire is proposing a tax on LLC, that amounts to a 5% income tax. I had an LLC for years for a small Autocad Drafting business. I finally got rid of it because of the paperwork and $100 annual fee.

I signed a petition against this new tax and advise all other small business owners to look into it, LLC or not.

http://www.petition.fm/petitions/stopthellctax/1000/

[Dill]

LLC separates your personal assets from those belonging to the business, giving the owner some protection from law suit. I only go on the advice I get from my lawyer and accountant.


Again I've seen the LLC protection backfire. To get the protection the 2 entities truly have to operate indepently. Are you going to file taxes with the LLC? If I buy a qt of syrup do I make the check out to you or the LLC? etc and so forth.

[Stickey]

Again I've seen the LLC protection backfire. To get the protection the 2 entities truly have to operate indepently. Are you going to file taxes with the LLC? If I buy a qt of syrup do I make the check out to you or the LLC? etc and so forth.

You're right Dill, this is why it's a good idea to talk this out with your lawyer. Even then you're never "bullet proof". We live in a sue happy society these days , there's no such thing as too careful. It's a shame really.

[Amber Gold]

I switched my insurance over to Alden when I started my maple business. It's w/ some cooperative out of Vermont so they're more in-tune w/ small farm businesses and the northeast region.

I had Allstate before. I was able to get coverage for my maple business (umbrella and equipment coverage) attached to my homeowners policy and it came out cheaper than my homeowners policy from Allstate. I also plow a few driveways on the side and I have coverage for that under my full-coverage vehicle policy which was also cheaper than Allstate. Not sure how this all works, but I like it, better coverage at a better price. From what I understand, they are fair to work with on claims as my parents live in Northwood, which has had issues with "Acts of God" in the past two years.

[howden86]

I carry $500,000 liability and product liability on my syrup operation and sysrup sales

[red maples]

ok well this is turningoout to be a good thread thanks mike in NY.

First the trade name is "Willow Creek Sugarhouse, LLC" and yes if you make out a check it should be that name as well as my labels on my bottleswill say LLC and what ever else will have the LLC attached.

Second the LLC is in my name.

And third the reason for the LLC is that my wife is a doctor, a pathologist to be exact, and her liability is much greater than mine even thoug she has malpractice ins. so the house and property are in my name. SO I wanted as much protection as possible.

As far as the legal fees well I wanted to do the LLC before I even went to the lawyer I knew there were fees invovled which I didi take into account when I started this venture!!!

I did do a little homework on the LLC's the main reason it might backfire is negligence by the owner or manager of the LLC and that goes for just about anything anyway. no matter what type of business you have.

Also as far as the LLC tax on small business I haven't read it over yet? Is there a cut off on how much money is generated. Meaning is there a minimun you have to make to pay taxes or is it 5% for everyone.

Oh yeah and I do belive that you need Ins. to sell at the farmers market. but I still have to look into that but I have time for that yet!!

[PerryW]

Try Farm Family Insurance Co.

In NH, they are part of the NH Farm Bureau and they provide reasonable insurance for all aspects of farming including sugaring.

[jdj]

Anyone in NY state know of a good insurance company that I could contact for insurance on sugaring equipment/structures?? Please post or PM me with suggestions. Thanks

[gmcooper]

We changed ins. companies 2 years ago as we found out we were no longer covered by our old company if we sold anything. New company had lots of maple questions and gave ok to insuring us ( we have lots of other stuff that was no problem and more of a liability). Found out this summer that in spring our new current company will no longer cover maple syrup. They feel too much liability. We will be going with another co. that is ok with maple and has covered it for many years.
My point after a long route to get there is we thought for years we were covered but at some point they stopped and never told us. They had no problem collecting premiums. Our agent discovered the issue after reading a newspaper story on our operation. Our new agents have done a better job keeping up with things for us.

[PerryW]

Anyone in NY state know of a good insurance company that I could contact for insurance on sugaring equipment/structures??

Farm Family Insurance is from NY:

http://www.farmfamily.com/


(from the website:)
The Farm Family group of insurance companies, headquartered in Glenmont, New York, offers life insurance and specialized property and casualty insurance to agribusiness and residents of rural and suburban communities in the Northeastern United States

To find out what we can do for you, call 1-800-The Farm

[Thompson's Tree Farm]

jdj,
Got my insurance through a local agent and the company we buy from is Erie Niagara. Covers the farm and sugaring operation for fire and liability.

[Bucket Head]

I was told last summer by a producer on the NY maple tour that inorder to get Farm Family Ins. you had to be a member of Farm Bureau. I don't know if this is true or not.

I attended a seminar today at the NY Maple Conference about small agricultural business and they stressed joining Farm Bureau and/or any other ag. related associations and getting in contact with your local co-op extension for help and advice on subjects like this.

Steve

[KenWP]

Up here one of the best ways to get insurance is to join the Farmers Union. Then you qualify for their insurance and also a few other benifits. Far as I can find out you also have to join before you can sell syrup to the federation.

[Dill]

I was told last summer by a producer on the NY maple tour that inorder to get Farm Family Ins. you had to be a member of Farm Bureau. I don't know if this is true or not.

I attended a seminar today at the NY Maple Conference about small agricultural business and they stressed joining Farm Bureau and/or any other ag. related associations and getting in contact with your local co-op extension for help and advice on subjects like this.

Steve

I used to be a farm family agent. Now I write with
http://www.co-opinsurance.com/
The Farm Family link and Farm Bureau is changing. In some states they are no longer tied together. Some still are. I'm still a FB member, they lobby on the state and national level for ag causes, so I think its worth a membership.
The reason I left Farm Family was they where bought out by a big national outfit and lost all local control. Where as CO-OP just writes in NH and VT. In fact VT maple assoc members get a 10% discount, which I'm actively lobbying to get in NH as well. Hopefully this spring.

[WESTVIRGINIAMAPLER]

I have also worked in insurance for 14 years, on the claims end and not the sales end. There are advantages and disadvantages to LLC and I have never set up one, just a personal preference I guess as I do all of our accounting and taxes and my wife does 2 other things on the side also. I carry $ 500,000 in liability which includes product and liability around premises if someone would get hurt. I had Farm Family and had coverage on my home thru them which is 30 minutes from sugarhouse but ended up switching to another company and setting up a homeowners policy and a seperate commercial policy on the syrup operation including building and equipment. I got a lot more coverage on house and syrup operation for the same money. The commecial policy costs me $ 732 yearly which includes $ 43,000 on building, $ 15,000 on syrup equipment and contents and $ 15,000 on my Kubota tractor.

I don't like paying $ 732 a year, but in this day and time, it's not worth the risk of not paying it especially with a lot of customers that come to the sugarhouse and we have over 100 during open house last year with the evaporator running for about 16 hours that day.

[Frank Ivy]

The whole point of an LLC is to be able to get the protection of incorporating without the accounting/tax headaches of a standard corporation.

The golden rules for LLCs 1. Everything relating to your business clearly says LLC, including phone messages, letterhead, labels, signs, and so on. The point of this is to ensure that nobody can reasonably argue that they thought they were dealing with you in your personal capacity. 2. Everything in the LLC should be kept separate from your personal affairs. In other words, maintain separate bank accounts, pay all bills out of the business account, deposit all monies into the business account, do not transfer items/money into and out of your business from yourself personally unless you treat it as though it was a transfer from/to a 3rd party, and so on. The point of this is that the main way the corporate veil is pierced is by showing that the owner of the LLC treated it as a personal concern, and not a business concern.

In terms of liability insurance on an LLC, the extent of liability on an LLC is the extent of the assets of the LLC. In other words, an injured party can only extract the value of the LLC. So the point of insurance is to ensure that the business can continue notwithstanding a lawsuit. Which leads to bizarre situations like . . . a 200,000 setup is insured for up to 2 million in liability, and when a few people get sick and die and sue, an award/settlement of 1.5 million is provided by the insurance company . . . but the setup was only worth 200,000!

Now that's screwed up. But that's the insurance industry.

The way it should be set up, of course, is that, for a 200,000$ operation, you buy insurance for 200,000 so that if you get sued and lose, the defendant gets your operation and you get a check for 200,000, which the injured party would no doubt be happy to take in exchange for your operation!! But that would result in a 1/10th premium on your policy!!!!

Don't get me started!

2 random thoughts . . .

If you have your sugarbush on land on which you have your house, you had better make sure that it's clear as day with your insurance company how you are operating, especially in these economic times. (This doesn't even touch on the problem inherent in running an LLC off of your home property. Is the garage you park the truck in LLC property or personal property? What if somebody slips walking to the sugar shack? Do they sue the homeowner? The LLC? Both? (if they have a competent attorney, you'd better believe they sue both!).

If you have any doubts about what your policy covers, and if you have any doubt about whether you have properly disclosed your set up to the insurance company, I strongly recommend that you send an email to your insurance agent in which you detail these things and request a return email confirmation.

For example, my son was at college and one agent wanted to write the auto policy as if he was not living here. Sure that saves me money on the premium, but what happens when he wrecks the car and kills 2 people? You think the insurance company isn't going to point out that I was being untruthful when I didn't correct the error on my policy? You think my agent is going to own up to having been aware of it when 4 million is on the line? So what do you think happens after I send an email saying, "please confirm that you are aware that my son lives here but is at college." You think I get a quick phone call saying, "you know, I'm going to put your son on the plan." :)


Last thought - in most jurisdictions, having two people on a house deed means that it can't be seized if somebody obtains a judgment against either husband or wife. If there is only one name on a deed and that person loses a lawsuit, the house typically can and will be seized to settle the judgment, subject to homestead exemptions (see OJ!). Also, having only one name on a deed is not necessarily an insulator if the other spouse loses a law suit. Does the other spouse own half the property on not? If there was a divorce, could you take the house because your spouse's name isn't on the deed? Unlikely. So here's my advice - estate planning is complicated at best, and unless you have a competent attorney tell you (in writing!!) that a single-name deed insulates the house from judgments rendered against the non-named spouse, don't be sure it does.

[red maples]

Yes we did have a good attouney do our estate planning, and strong advise we set it up they way we did. that is also the reason why we are going to get the umbrella policy for all of our propertyso if someone slips then yes we are covered by the the business ins and the umbrella/homeowners ins. Had 2 lawyers recomend LLC's the thing in NH is under the tax laws LLC's were never written in so as of right now LLC's pay no type of cororate/business tax just for being an LLC. all business have to pay a tax but you have to hit that taxable threshold first (don't know what that is) So that is why there is an impending 5% tax for LLC's on the table at the state house.

Oh yeah if I get divorced the property is mine!!!:)

[Frank Ivy]

So that is why there is an impending 5% tax for LLC's on the table at the state house. Oh yeah if I get divorced the property is mine!!!:)

My understanding is that NH has no personal income tax. Is that correct?

If so, taxing an LLC on distributions to shareholders/employees is just a backdoor way of creating an income tax that sticks it to small LLC owners but not to sole proprietors.

Interesting.

[MapletopFarm]

The issues with respect to a homeowners insurance policy perhaps being inadequate for our "hobby" really relies on to what extent this activity can be considered a "business". The typical homeowers policy language defines "business" as a "trade, profession, or occupation" within most policies. If you don't sell syrup, your homeowners policy is quite adequate in providing protection for your equipment and sugarhouse..and liability if the neighbor dies from your good syrup!! (if your sugarhouse is a seperate building worth more than 10% of your dwelling, you'll want to make an adjustment to your policy.) Highly suggest that you have Replacement Cost Coverage for Personal Property considering the inflationary spiral that stainless steel gear can be susceptible to.
Now, for those who might sell "some" product, the question becomes is it incidental or more so. Only the most rigid of interpretations of how "business" is defined in the policy could likely become problematic. The backyard sugarer who might sell some quarts here or there, even at roadside, and survives his wife's wrath when it become apparant that hubby is still in the hole from this nonsense could hardly be said to be excercising a trade, profession or occupation, and the homeowners policy should be fine. Likewise, unless there are other more involved considerations, there's no compelling need to set up an LLC. However, the guy with a few thousand taps, an oilfired evaporator, vacuum system, RO and a canning line in a designer sugar shack that indeed treats his "hobby" as a revenue and expense activity is another story all together.
There shouldn't be a need to run to Farm Family even if the latter is the case since many homeowners insurers have the ability to tailor their policy to meet your need. Consult your independant agent who represents many companies and it's more than likely that they can quite easily take care of things.
Get in a pinch, contact me by PM.

[maple flats]

Be carefull and ask ALL of the questions. I was an LLC for several years in my previous business. A few points. Who owns it? Who are the officers? All pays will be official, withholding required, quarterly filing if small, monthly if bigger (I don't remember the break point), file a day late, big fine, everyone will need to be covered under workman's comp, expensive, you will need to pay a premium for everyone, disability too. You will also need to pay unemployment premium for each worker, including the officers BUT the officers can NEVER file to collect UNLESS the LLC goes belly up. There are many other things. In NYS we had to pay a fee to be an LLC, $250 yearly (back in the mid 80's) just for the privelage to file the extra taxes and all of the fringe costs. After a few years of that I disolved the LLC and became a sole proprieter with appropriate insurance coverage. I now have farm coverage, product liability, sugarhouse liability, all equipment is itemized and covered and I have a good umbrella policy. All of these cost far less than the LLC ever did. Besides, if you or your family are the sole owners of an LLC the protection is limited as opposed to being a stock held company with shares traded over the counter, or on an exchange. Ask your lawyer all of these before you jump in with both feet and presume a safety net that may have big holes in it. Oh, all insurance and even the phone you have will cost more as an LLC, as will your electric and many other expenses. If you have a trailer it will not automatically be insured by the tow vehicle as it was when you were just jon doe, private citizen, you will need separate insurance.
Think twice about continueing forming an LLC. Get all of the facts from your lawyer, insurance agent and accountant first. And speaking of accountant, you will need to file a tax return for the LLC and then any money you get from the LLC will be taxed again. If you haven't guessed, I have a bad taste for LLC or any incorporation method. This is not to say it is never a good idea, just be aware of the whole picture.

[Frank Ivy]

Be carefull and ask ALL of the questions . . . .This is not to say it is never a good idea, just be aware of the whole picture.

Great advice.