Insurance, nobody wants but every makerspace needs it.
It’s probably the thing that new makerspace owners are the most confused about.
“What insurance do I need for my makerspace and how do I get it?”
There are several types of insurance needed to protect a makerspace, its owner, and employees..
We are just going to look at General Liability (GL) and Workers Compensation (WC) here. This overview is intended to give you enough information to talk with your local insurance broker to get what you need.
General Liability is the main insurance policy that protects the business, it’s assets, and the owner from law suits, injury claims, etc… It is often required by the state and is a requirement of most commercial building leases.
It has been our experience that most insurance companies don’t know how to classify a makerspace. We have been successfully insured as a Trade School where they consider our staff to be instructors and the members to be students.
Non-profits can be insured as a “Social Service Agency” instead of a trade school. Please note that while an insurance company can refuse to offer coverage they can’t adjust prices based on a perceived additional risk. For example, your non-profit serves only autistic students. That is prejudicial and illegal.
Other factors that may effect price include the size of your building, equipment included, and building specific items such as fire sprinklers and construction type. You will need to include your landlord as “named insured” on the policy so as to protect the building owner from lawsuits resulting from your operation.
The other insurance that causes a lot of concern is Workers Compensation. It only applies to employees and volunteers in the event they are hurt while performing their duties.
Workers comp charges are determined as percentage of the person salary based on the how their job position is categorized in the Insurance Classification Table. The two codes we use are:
8810 Clerical Office Employees, rate 46 cents per 100 dollars
9062 Clubs – all employees, rate 4.70 cents per 100 dollars
Other codes may apply but you can use those to start the conversation with the broker.
Remember that contract employees typically provide their own workers comp insurance and don’t need to be included on your policy. The business owner is also typically excluded.
Non-profits have a couple more options for workers comp because volunteers don’t get a salary making it impossible to charge based on compensation.
Primary insurance coverage runs about $7,000 per year and cover employees and volunteers in the event they are injured on the job. It acts as their primary insurance for the accident.
Or you can select secondary insurance which provides additional protection for volunteers above what ever personal health insurance policy they have. This insurance is considerably less expensive around $500 per year.
When it comes to insurance it pays to build a relationship with your local broker and to have an open and honest conversation. The tips above should help with finding the best classifications for your space but are not the only option. You need to figure out what works best for your space and go with that.
In the end I think you will find the insurance is relatively easy to get and much less expensive that you might have imagined.
I hope this helped to provide some guidance. Whether you are a new or existing space I suggest you get quotes annually from other brokers. For example we just changed Workers Comp brokers and saved $10,000 for the year.
Makerspace Blueprint offers classes and licensing of procedures, standard documents, and class curriculum that will save you years of effort and hundreds of thousands of dollars. It is the secret weapon to running a sustainable makerspace that provides the impact you want.
Go to www.MakerspaceBlueprint.com for more info or click below to schedule your 1-hour consultation call now.