Think outside the box....

[Butch103]

Jarhead once bubbled...


If you sell someone a cup of hot coffee and they spill it in their lap, IT'S YOUR FAULT. Ask McDonald's.

Point well taken....no accounting for stupidity........So if I were to read your mind you are saying although the customer bought the parts and rented the tools from this imaginary shop to service his/her reg.....if the reg fails, they drown the family sues the imaginary shop ?? :boom:

 

[chris_b]

MikeFerrara once bubbled...
The potential liability hitch...

Well, somehow LP is getting insurance. They perform maintenance and obviously source parts as a "non-authorized" dealer. There must be some way for others to do it and get insured as well.

 

[Genesis]

is all about figuring out how to do it, stay insured as you must to stay in business, or structuring your company so that you simply don't care one way or another.

Think the latter is not an option? Sure it is. There are plenty of firms that do exactly that - in fact, most probably do, although many don't admit it.

Few if any firms can suffer a truly catastrophic lawsuit and survive on their insurance. Those who think they can are probably deluding themselves, especially small businesses.

This was an analysis that I had to go through myself. We had plenty of insurance, but if we had been hit with a legitimate $10, $50 or $100 million claim we would have been cooked.

Never mind that insurance companies will do their damndest to avoid paying on truly big losses, of course. If you have a real whopper you can bet you'll end up suing THEM - just to get them to pay up as agreed!

Insurance is a good thing for the "regular, ordinary, everyday" things that would otherwise kill your firm. The building fire or car wreck with an employee on the clock behind the wheel, for example. But if someone gets killed and its connected to your firm, all bets are off.

The solution to that problem is corporate organization and compartmentalization of assets so that you don't get personally attacked (at least not successfully) in such a circumstance.

Its part of proper corporate planning, and something that any business-owner ought to be engaged in, because for the truly nasty "oh no" situations you can't GET enough insurance for it to matter (and if you can, you can't possibly afford it.)

Dive shops have handled the liability problems with their boats with releases and such, and these have been held to be valid and enforceable. I'm willing to bet, Mike, that such a thing for all parts sales would solve the problem. Autozone isn't an "authorized" seller of brake parts for a specific car, but they sell those things over the counter all day long.

Think outside the box - there's a solution to this problem if you are truly interested in solving it.

 

[MikeFerrara]

chris_b once bubbled...


Well, somehow LP is getting insurance. They perform maintenance and obviously source parts as a "non-authorized" dealer. There must be some way for others to do it and get insured as well.

Suppose you tell us about LP's insurance. I have a compressor, sell air and mixed gasses and teach classes so I need diveshop insurance. I don't thing LP needs dive shop insurance. They are just a store. Don't confuse what they do with being a dive shop.


There are only a couple, actually three insurance companies (agents) that I know of in this business. There may be more but I don't think there could be many. V & B (PADI's) insurance Gale Smith and Marsh. They all have pretty much the same rules.

To get V&B insurance for a shop you must be a PADI shop. LP can't be one of those. To get Marsh insurance you must be a IANTD shop or instructor (LP is not one of those) and I'm not sure about Gale Smith

One or more of these companies may work with more than one agency (not V&B and I don't think Marsh) but the point is they only insure you if you are governed by the rules of an agency. This is what they see as limiting their exposure. They also insist we follow manufacturer rules and recommendations.

LP is not insured by any of these companies and if they are it is under false pretenses.

 

[Genesis]

Mike, this stuff is simple.

Set up a second corporation.

The second corporation sells the parts. It has its own books and accounting. It is nothing more or less than a retail store. (Heck, it could buy regs from LP and resell THOSE too!)

It is completely separate, legally and corporately, from your dive shop. It is therefore outside of the view of your insurance carrier for your dive shop.

If you want to get REAL crafty, sell the parts MAIL ORDER! Now you don't even have physical colocation! Require a written waiver (faxed is probably ok - check your state law) for all sales.

Find a handfull of guys willing to become corporate founders so that its not a "closely held" corporation under the law (the key is that you and your wife can't be the only stockholders) That solves the problem of the veil being pierced.

If you make a roaring success out of this, you might even make a small fortune on the parts sales - especially if this view of thinking "outside the box" spreads....

Just think Mike - you could solve your complaint and do something that would get you in "Who's Who" all at the same time

There is no such thing as "can't" Mike. There is "not profitable", and there is "I don't want think long or hard enough to solve that problem", but there is no such thing as "can't" when it comes to small business.

The problems you've presented here don't even register on the scale of true troubles...

 

[chris_b]

MikeFerrara once bubbled...
Suppose you tell us about LP's insurance...

Hey, whoa, no need to cop an attitude on me. I'm just trying to think this stuff through Obviously I don't know enough about how the industry works with regards to insurance.

Since you need insurance to sell gas and teach, would it be possible to establish a second business that just sells parts? According to what you said, LP doesn't need insurance because they only sell parts, right?

What would be the problems with something like this?

 

[chris_b]

Genesis once bubbled...
...Set up a second corporation...

Oops, looks like I clicked on the submit button a little slowly and somebody beat me to the idea...

 

[MikeFerrara]

chris_b,
Sorry, didn't mean to rattle ya. I'm sure they have insurance for if someone slips and falls in their store or something but I don't think it's diveshop insurance. I don't know what their plan is for a product liability suit. I guess insurance is not total protection but without it you don't teach. I guess the plan is to let the corporation take the beating, walk away and concentrate on your other businesses.

 

[Genesis]

for any "small business."

It is also the reason that its pure folly to do any kind of work that could lead to such liability as a proprietorship. You can't buy the insurance you need in today's legal environment to protect against anything serious.

The "ordinary stuff" you can insure against, but the truly awful you cannot. Not for ordinary mortals, anyway.

Why do you think that most shops that also have boats organize separate firms....

Some people see this kind of compartmentalization as "evil" in that it prevents attorneys from wiping out the owners of a shop when there is a problem.

I call it smart and the only logical choice when it comes to corporate organization.