A friend of mine recently built a crib for his new son. He’s now toying with the idea of building cribs for sale as a side project for some supplemental income. My concern is that there may be legal/liability issues involved that he’s not aware of. Does anyone have any experience building (infant/toddler) furniture for sale?
– Brian
Replies
Brian,
There are Federal Product Safety Standards, that I believe must be followed. The standards cover the safe design of cribs, including the proper spacing of slats to prevent strangulation and the side height of the rails to prevent tumbling out.
Your friend should look the standards up to protect his own child, even if he never makes another crib. If he based his crib's design on an older model crib, or just winged the dimensions, he may have inadvertently created a hazard.
I'm not sure what part of the government issues these regulations but a web search, or someone else here on Knots, can probably help you to locate them. If I were searching I'd start with checking the Consumer Products Safety Commission.
Having liability insurance may not be legally required, but I would want to have it before selling something like cribs.
John W.
John -
He used the federal guidelines for the design of his crib (slat spacing, etc.), so I think he's on the right track there. I'll have him check into the insurance.
http://www.aap.org/family/inffurn.htm
Just remember that, in the USA, anyone can sue anyone over anything, anytime.
With something as potentially serious an an infant crib, where accidents are a possibility through no fault of the crib maker, good liability insurance protection is a must-have. Make sure the underwriters knows about this activity, and has agreed that the insurance covers liability claims associated with it.
Years ago, I would let the neighborhood kids have the cutoffs and other scrap pieces from my shop. Other than an occasional splinter, there was never a problem and the kids got hours of fun playing with them.
These days, I don't do that and I would probably pass on making anything for kids use. In addition to the design issues (slat spacing, etc) you have to pay close attention to the finish since a lot of this stuff will get chewed on. For my money, the potential risk just isn't worth it.
Anything made for kids' use has it's risks. If he's going to do this, he needs to insulate his assets (e.g., his house, car, savings account, retirement account...) and have insurance.
forestgirl -- you can take the girl out of the forest, but you can't take the forest out of the girl ;-)
Another proud member of the "I Rocked With ToolDoc Club" .... :>)
I turn down this type of work all the time. Besides the liability issue there are lots of nice nursery furniture (nicer then adult furniture) on the market at great prices that make it impossible to compete. The exception, of course, would be a special piece made for a family member.
My legal counsel tells me that liabilty insurance would cost so much that it would make any venture unprofitable, if you could even get someone to write a policy to a small, one-man firm. They also tell me to use common sense and don't do anything that you don't feel comfortable doing.
Besides the laibility issue, wouldn't you feel terrible if a child was badly injured from something you made? I couldn't live with myself.
The concern about possible strangulation is NOT merely a theoretical matter. A medical associate of mine many years ago, before there were standards for such things had a child patient of his strangle while in a hospital. This was a devastating experience for all concerned.
Tom
Boy, the liability would be huge. Isn't it a shame that we are such a llitigious society. Personal injury is now viewed as a lottery system.
Because it is covered so much in the media and because it has become a political football, the common "wisdom" is that everyone is suing everyone else and that it is impossible to get reasonably priced liability insurance. The truth is that neither "fact" has much basis in reality, especially when it comes to insuring a small business making a fairly standard product.
Someone interested in making a product like cribs should talk to a few insurers who are expert in small business insurance, and get some quotes before deciding whether or not it would be practical to get into the business. There are tens of thousands of small businesses, many of which make things a lot more hazardous than kids furniture, who seem to be making a profit despite their insurance costs.
John W.
Edited 11/10/2004 12:30 pm ET by JohnW
John: From personal experience, I second what you are saying here. While woodworking is my passion, and a pretty good 2nd business for me, I am a concrete contractor, specifically, mudjacking. This is raising concrete. We are in the highest liability bracket for insurance both with liability, and with workman's comp. Premiums charged to the business are based on the product, but more importantly, the total dollars earned annually for the business. I don't believe a liability policy for a woodworker making children's furniture would be excessive.
JC
JC ,
Whether you believe it or not , it may be true . Call around and ask for your self. Remember as was said we now live in a sue happy country. A good example is the rising costs of contractors insurance mostly due to mold and mildew issues. Many companies have stopped selling this type of insurance. So with fewer places to turn and less competition we are being charged more. Underwriters are afraid of their own shadows. Many contractor policies have gone up 400% , and offer no more coverage then before. This is true here on the West coast I can't speak with authority on other areas.
dusty
My $2 million dollar policy, with an exposure of $300.000 annually, costs $1200.00. I'm in the midwest.
JC
JC ,
That $ amount is quite similar to premium rates in my area also. The question I would ask is does your insurance carrier give you their blessings and permission to mfg Cribs and such ? If you called them and asked them point blank if that is o.k. BTW I am not recommending you do so just curious. Did you know an insurance Company can drop or cancel anyone they consider to be undesirable ? With little or no explanation.
good luck dusty
I have to jump in and disagree with the shibboleth that we're a sue happy country. In the county where I practice law (unrelated to filing law suits), the public law library is funded by the fees paid for filing law suits. The number of suits has continued to dimish over tha past decade to the extent that the public law library cannot afford to buy books. Indeed, contrary to the "received wisdom," the number of law suits statistically is going down.
I think we can consider other reasons for premiums going up. Maybe premiums go up because the insurance companies collude to make more money. Isn't there more evidence of big busines collusion to make profit? That's the lesson of Enron and its cronies at the investment banks. Or maybe it's the existence of so many companies willing to risk public safety. Wasn't it the ONLY the law suits that forced Ford to backoff on the Explorer tire issue. Would Merck have withdrawn it's Viaox if it wasn't afraid of the legal consequences?
I think this whole mantra is just a ruse. Sure there are abuses, but the abuses that would come by people and companies with the power to do substantial harm in the absence of law suits would be enormous.
Whether you want to call the USA "sue happy" or not, it is the single most feared country with respect to liabilty law suits. bake sale mentions the stats are that the # of cases are declining and I have no such stats to counter that, but average/median court awards are still increasing, including product liability law suits (the concern that obrian7 was addressing) and judgements are far higher in the USA than any other major country. Liability insurance is far more expensive in the USA because of this.
On a similar note, see the following post regarding insurance for rocking chairs: http://forums.taunton.com/tp-knots/messages?msg=11131.3 (hope my link works!).
Baby crib manufacturing is a high liability undertaking.
Many "crib deaths" occur each year and some remain unexplained which could lead some people to blame the crib. Over the years, some cribs have been poorly designed and resulted or contributed to some deaths, making lawyers sensitive to anything involving cribs. And it seems we always want to blame somebody else when something goes wrong. You can check back issues of Consumer Reports magazine for more details. And there are most certainly standards that must be followed for crib designs and these must be adhered to.
You should protect yourself & your company by transfering that risk (ie: of being sued) by purchasing liability insurance. obrian7 if your friend's current business insurance does not cover liability from cribs, he/she should go to their insurance broker/agent. They are supposed to be experts on placing insurance. This is their job. And they will try to find an insurance company that covers such products.
Coming at this from the standpoint of an amateur woodworker, but a professional litigator, let me suggest that the argument over whether our society is "sue happy" or not is too ambitious a subject to be fairly resolved in this forum. Suffice it to say that varying viewpoints are less a factor of objective reality, then they are of subjective experience.
But for this poster, what is called for is a little common sense. Insurance is a fine idea ... but first you need to understand whether you need it. As a one man shop you would not be an attractive target for a big money suit - you are not General Motors. In fact, being well insured would make you more likely to be sued. Perhaps you have the good fortune of having a lot of assets to lose. Still, some states' laws are very generous with exemptions. Exempt assets are those that a creditor, including tort claimants, cannot reach. In Florida I can sock unlimited monies into my homestead, all of my marital assets are protected, and my income is completely exempt because I support a child. You should consult with an attorney who practices collection law or bankruptcy in your state, to see what exposure you realistically have from law suits. You may opt to "self insure" if your exposure is limited, as mine would be for instance. If you do have significant exposure, consider insurance, but also conduct the risk laden business through a business entity that shields you, like a corporation. Follow corporate formalities, and do not mingle corporate and personal monies. Of course, your licensing agency, contract vendors, or landlord may require liability insurance. A lawyers' advice - don't get caught up in rhetoric about "society" - get the facts of your exposure and use common sense... SEE A LAWYER.
Jimbo ,
So , you think a one man shop with a low exposure or dollar volume has a lower risk of being sued . isn't' it actually the insurance company that pays off, not the one man shop or the individual ? Your statement that a corporation type of setup will protect individuals does ring true and makes good sense . Us little guy's one person shops are now mostly carrying one to two million in coverage in many cases. To suggest that self insuring is even a viable option for the average Joe is a joke. In order to be legally in business as a Cabinet / Furniture maker type one of the requirements is generally to meet the financial responsibilities required by the state you are operating in. Many states require a state builders license , you can't get one of those without the correct bond and the adequate amount of liability insurance.and completed products insurance , And many cities require a city license as well. Big business can self insure their own workmans comp . They do so by having some sort of an impound type of account with a lot of money in it . That is out of the reach of small business. You talk an intelligent conversation but the facts don't add up .You are probably a great professional litigator , but your business sense may be lacking. Sue happy or not as the Lama people say " Spit Happens ". Really if any of us had a loss of a loved one due to a possible negligent product type of thing we would go for everything we could, who are you kidding ?It wouldn't matter to us that it was a one man shop or not .
dusty
Dusty -
I appreciate the perspective you bring to the issue - which I take to be that of a small professional shop (an "ordinary Joe" as you put it). Yes, I am suggesting that a small business without assets and without insurance is less likely to be sued than one that has assets or is well insured. You suggest I lack business sense - but your comment that the injured person's family will "go for everything they could", meaning that would sue anyone responsible regardless of collectability, demonstrates your lack of "business sense" on legal issues. Personal injury cases are 99.9% handled by contingency lawyers, and no contingency lawyer will take on litigation against an uncollectable and uninsured defendant just because the family wants to do so. That lawyer has to make a living too, and will not throw away effort without upside recovery potential. An attorney could be retained hourly for that purpose (paying for their time by the hour, rathar than on contingency), but few families would compound their loss by spending $20 or $30 thousand dollars to get an uncollectible judgment. Personal feelings do not drive the litigation bus, at least in significant cases - collectibility does.
Regarding your comments that "self-insurance is a joke" because of requirements to have a builder's license and bond, I believe I addressed that in my post, and I agree with you - if your licensure requirements require proof of liability insurance, then there is no choice outside of obtaining the insurance, or meeting statutory financial responsibility requirements to self-insure, which means having assets. Likewise, a commercial landlord will require proof of insurance, as would any distributor/retailer with whom you contract, or any GC you would work under, or bonding company on a job where work is performed. However, I was responding not in the general context of a professional one man shop, but to the specific question of the initial poster, who has a friend who is considering selling a few items on the side, as supplemental income. It is not at all clear that a person under those limited circumstances will be required to have a builder's / contractor's license. A person in that context may only need a city/county occupational license, and he/she can inquire on the local level what threshholds trigger the requirement of a contactors / builder's license (which in turn would trigger the mandatory insurance requirements). Before you chime in with the requirements in your locale, understand that licensure requirements vary from state to state and even county to county within states, so the requirements may not be the same for the initial poster's friend. If under the law of that person's locality he/she can avoid the need of the contractor's license, then I still maintain that the person should consider their ultimate collectability before jumping to the conclusion that they must obtain expensive liability insurance. They should consider the legal realities that uncollectible defendants are less often sued, rather than buying into hysteria about our overly-litigious society.
It is a case-by-case decision to be decided in the context of the state's laws of liability, licensure, and exemptions. I stand by my recommendation that the poster's friend should consult the collection / bankruptcy / business attorney before throwing away money for unecessary insurance, or before giving up and not engaging in the modest business proposed.
Hi Jimbo ,
I said a party with a loss may sue regardless of it being a one man shop or not , I never said sue regarless of if there is anything there to collect , you said that . As is true many small shops and business' now carry one to two million in coverage . Most attorneys will work with those numbers.I never suggested that lawers work for free.As far as a small business self insuring them selves , or operate without insurance , I'd be cautious about giving that advice to anyone . If an individual wanted to self insure themselves , that could work out just fine if they happen to have a Million or so dollars just sitting around that they don't need right now . It would seem the purpose of selling the objects would be to earn money , if they had an extra million or two would they really be selling little onesy twosie items ? I understand your reasoning about not being a favorite target to be sued if you have nothing to take or lose .
happy litigating
I agree with JohnW.
If large companies can obtain insurance for a reasonable price, so can small companies.
Find an insurance broker and let him find you insurance.
I disagree with the assertion that affordable liabilty insurance can be had. My limited experience says otherwise. The best example I can give is when I was a machinist our shop invented a little machine to grind the face of rebuilt diesel engine parts. Our research showed that (with only a limited number of machines made, 24 to be exact) it would cost $10,000 a year every year the tools were in use...and that could be a long time. The insurors would also have to certify the machines and see that they were considered safe by their standards, we would have to apply guards, etc. per their demands. We scrapped our plans and our pilot model.
When I want insurance, I have my insurance broker find it for me.
For cribs and other child products it is reasonable.
obrian 7 ,
I have had General Liability and completed products insurance for 20 years or so . in my policy it excludes specifically Cribs , Baby Furniture , step stools and ladders and Chairs . The insurance costs keep rising and it has become increasingly more difficult to get insured , especially for new business' . The liability and risk may out weigh the financial gain . I personally have not suffered financially by not doing those types of works.
be careful and have a chat with some insurance agents and find out for yourself before any problems can occur.
dusty
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