Hackerspaces Are Hard: Insurance

Do you dream of opening a hackerspace, makerspace, or co-working space? Maybe it’s in the works and you’re already scoping out locations, intoxicated by visions of all the projects that will emerge from it. Here’s a sobering thought: makerspaces are a great big pile of risk. If the doors of your ‘space are already open, perhaps you’ve come to realize that the initial insurance policy you signed doesn’t really fit the needs of your particular creative paradise. Even if it does, the protection you need will change as you acquire new toys.

So why should you even get insurance? For one thing, your landlord will probably require it. If you own the building, you should insure it to protect yourself and anyone who uses the space. Do it for the same reason you’d insure a car, your house, or your collection of vintage pinball machines: to mitigate risk. It takes a lot of hard work to open a makerspace, perform the day-to-day operations, and keep it growing and getting better. Whenever the unthinkable happens, insurance will protect your investment as well as the people who make it a great place to be.

In researching this article, I contacted several well-established makerspaces in the United States as well as most of the major insurance providers to get both sides of the story. My intent was not to make a how-to guide, but to simply explore the topic and provide a view of the process and the struggle.

pinch point warningWhy is it Hard to Get Insured?

Getting a space insured is not an easy undertaking. While the task itself is hard for makerspaces, the concept of a community workshop is a difficult one for insurers to fathom. Most of their business clients fall into one category or another, so it’s easy to start with a boilerplate policy and go from there. But makerspaces and hackerspaces tend to touch many categories—machine shop, wood shop, electronics lab, and so on, and every category presents its own set of risks.

Another sticking point: most makerspaces are non-profit organizations. Some insurers I spoke with simply don’t cover any non-profits at all. Something else that makes risk assessment difficult–makerspaces are technically a private group, except for one night each week when many of them open their doors to the public.

To further complicate the picture, this is a group that has both shared and private resources and is trying to keep the private resources safe from theft and misuse. Most of this group’s valuable resources are tools, many of which are heavy or sharp or operate at high temperatures. It’s pretty much wall-to-wall risk. It will probably be a bit difficult, but it is by no means impossible to get insured in a way that meets the needs of your makerspace as well as those of your landlord.

The Insurance You Need to Have

pile-of-paperworkEvery landlord is going to require some type of insurance coverage. This should be spelled out in your lease. If it isn’t, find out what your landlord requires and get it in writing from them. Keep in mind that governmental requirements differ by state and throughout the world. Every makerspace’s needs will be different. If a space has salaried employees, many states will require workers’ compensation coverage. This covers work-related injuries and is designed to prevent lawsuits against employers.

A landlord will typically require general liability coverage. This covers all kinds of bodily injury from slip and fall accidents to severed digits. It also covers personal injury claims like invasion of privacy, libel, and slander. The landlord may also require property coverage to protect against theft, loss, or damages. Property coverage doesn’t include automobiles, so keep your Power Wheels racer and your Mad Max car safe or else insure them separately.

The Insurance You Want to Have

Trapped_woman_on_a_car_roof_during_flash_flooding_in_Toowoomba_2You might want to consider additional types of property coverage depending on your location. A makerspace in California would probably benefit from earthquake insurance, and one in Kansas should consider tornado and/or hail coverage. If you’re along the Gulf Coast or Eastern seaboard, look into hurricane coverage. All of these cost extra, though it could be worth it someday.

No matter where you are in the world, buying insurance against equipment breakdown is a great idea. But beware of the fine print, because there are two types of coverage—replacement cost and market value. Let’s say you get a great price on an old used Bridgeport mill and get it all set up. It runs like a champ for a year and half and then fails spectacularly. Did you get replacement cost coverage? Great!  You’ll get a big enough check to cover the cost of a brand new Bridgeport. If you chose market value coverage, your check will only be as much as the actual cash value of that beat-up machine and you’ll be stuck in a loop of buying used mills. Of course, a replacement cost policy will carry a higher premium. But choosing to insure equipment at market value is actually a negotiating point in your favor because the company won’t have to pay as much out whenever you make a claim.

The Agent and the Broker

white-duckSo how do you find an insurer? The last time you bought car insurance, you probably chose the company based on past experience, word of mouth, or maybe even the company’s advertising spokesthing. You reached out to them and were assigned an agent in your area to work with. Here’s the problem with getting insurance this way: your agent isn’t really on your side. Sure, they might send you a postcard on your birthday, but their loyalty lies with the insurance company.

This is not the ideal method of shopping for makerspace insurance. What a makerspace is asking an insurance company to cover has far more serious implications compared to more common business models. For instance, your local grocery store has slip and fall insurance, but it’s a little different. If you wipe out on a melted Popsicle in front of the frozen pizzas, you’re not likely to cut your hand on a circular saw on the way down or land in a pile of sharp CNC waste.

What you want is someone who works for you. Someone who will take all the documentation you can provide about your makerspace and play the insurance game on your behalf. You want what is known as a broker.  When I asked Bucketworks in Milwaukee about their experience obtaining insurance, they pointed me towards their broker, John Toepfer from The Anderson Insurance Group. John was an insurance carrier underwriter before becoming a broker, so he understands exactly what information insurers are looking for when assessing risk. In fact, he has a special application prepared for makerspaces that gets to the heart of potential hazards.

Be Transparent, Because They Will See Through You

ledgerSo let’s say you found a broker to spare yourself the headache of finding a company that will even think about insuring a makerspace. Like I said, each space is different and has a special set of needs that depend on many factors like location and building construction.

Finding a broker is just the beginning of the journey. There is no off-the-shelf insurance model for makerspaces. The policy you sign will be custom-made from all the available information about the building and the intended activities within. The more knowledge you can drop on your broker, the better.

What does this knowledge include? Usually, a copy of the lease. This will ensure that you, your landlord, and your insurer are all on the same page. The size of the building is a factor as is the size of your membership ranks.  You would do well to describe the intended goings-on in great detail and make a comprehensive list of all tools and equipment. Copies of instruction and service manuals for all your dangerous machinery go a long way toward assessing risk accurately.

Transparency is a good policy in general. The company is going to send an inspector at some point, so there is no point in trying to deceive them. Established makerspaces know the value of transparency. For instance, Dallas Makerspace has a wiki page devoted entirely to the subject of insurance. There’s even a log of their experience obtaining insurance and a few examples of the kinds of questions that were asked of them.

How to Make Insurance More Affordable

The fewer people with access to dangerous equipment, the more affordable the insurance premium. If your makerspace rules explicitly state that no one under 12 can use the soldering irons, you’re mitigating risk and will be rewarded for that when the insurance company is calculating your premiums. Installing an alarm system and/or surveillance cameras could also get you a discounted rate.

Once you have coverage, one fairly obvious way to make it more affordable is to pass the cost on to the members. Makerspaces charge an average of $50 per month for individuals. Is that the right amount for your membership fee? Whatever fee model you settle on, the cost of the insurance premiums should be a factor.

Don’t Be a Stranger

Your membership dues will probably include a chunk of money for new equipment. Once the board is voting on what to buy, keep the insurance company in mind. Dallas Makerspace got an auto lift last year and promptly found out the hard way that it wasn’t covered in their existing policy. After the insurance company found out about it, the owners paid an inflated rate until they were able to revisit their policy.

Don’t Reinvent the Wheel

Insurance-thumbStill don’t know where to begin? Go ahead and stand on the shoulders of giants. Established makerspaces have worked out a lot of the general kinks of getting insured, and there’s no shame in asking them for advice or for the name of their broker. Some makerspaces go so far as to offer serious consultation sessions in exchange for legal tender. Learn everything you can from them and pay it forward.

If you’re building the first makerspace in your area, it might be more difficult to get started. You can save a lot of time and frustration by going to some place like a local machine shop or other high-risk industrial operation to ask for the name of their broker or insurance company.

Makerspace insurance is hard, but there are ways to make it easier. Plan out the space in advance, collect documentation as you go, and find a broker to play the insurance game for you.

48 thoughts on “Hackerspaces Are Hard: Insurance

  1. Sadly in the USA, the land of sue everyone for anything, it’s even harder. If a person comes in and intentionally shoves their hand into a running shredder they can SUE YOU for not stopping them. and many times they win because the cost of defending yourself is usually higher than just paying out. And juries of peers typically are loaded with the same kinds of dimwits that shoved his hand in the shredder.

    Its why a lot of hackerspace ideas stop dead. the insurance costs and operating costs are high. and most people want to freeload. finding 100 people willing to pay $100 a month to pay for the rent, insurance, utilities, etc.. plus to afford to buy equipment and other things for the collective… it all falls apart fast. and yes running a 100 person hackerspace that has anything industrial like CNC and metal lathes does in fact cost $10,000US a month just to keep the doors open.

    1. Is there any reason the equipment couldn’t also be used by resident machinists to bring in money and thereby subsidize the makerspace? I can’t imagine the CNC machines would be running all the time for 100% hobbyist projects.

      1. In theory no.
        But in practice you will quickly ruin friendships. “You can’t use the now, I need to fulfill this order so we can pay the electric” or “why haven’t you filled any orders? Don’t you know the ‘space is counting on you?”

        Odd jobs followed by donation here & there are nice, but a business model relying on these jobs, quickly becomes a job of it’s own. Most people join ‘spaces to pursue their hobbies not get a part-time job.

      2. Commercialization of a space, as mentioned by others, can really kill the vibe of a communal workspace. It turns it into a techshop, which is not what many hackerspaces want to be.

      3. I wouldn’t dsy know but it could be confusing to the space’s member. A space should be incorperted as a non profit, but their eill be members who can’t understand no profit in not prohibited fro gerating income. When A person uses the spaces tools to make item for sales to the public for profit. Any tools or product, that person should be required to shoe proof they have liability insurance similar to any responsible for profit business would cary. No doubt such a requirement would diminishe the possible pool of those who would rent the space in that manner Possible? yes, but probably impracticable. Many amateur radio clubs design electronics projects and sell kits with proceeds going to the club treasury.

        1. I’m not certain I got the whole message there but Non-profits are allowed to make profit on their services.
          You are limited on how much of this profit stays in your accounts (some multiple of operating costs). You’re also limited on how this money is used. It can’t be given to investors, payed out to members, or other private interests. The NFL is perhaps the best (most egregious?) example of non-profits that make money on their services.

          1. My rushed comment was full of errors no my intent wasn’t clear. Often their are members of non profits who go bonkers when they hear that a nonprofit they belong to is going to make money in some manner, to the point they resist the organization’s treasury being put into interest bearing accounts. My point was those members could toss a monkey wrech into the works in regards to the topic I was commenting to. I have some experience as a member of nonprofits to the point of being on the BOD. As you say a non profit can earn profit for itself, but that profit isn’t never to be distributed to the membership. Not even if the organization dissolves, a that point the property of that non profit has to be given to another non profit. For a non profit to begin to try to generate revenue it will first have to over come deep rooted notions at that group I mention at first. Easier said then done of course..

          2. Leithoa – The MakerSpace can still maintain it’s NOT-FOR-PROFIT status by segregating the member’s FOR-PROFIT marketing from the SPACE. The member can physically work on the original idea at the SPACE but as soon as he tries to market the idea do NOT use the space’s mailing address, email or phones. And if he wants to share the profits with the SPACE do so as a charitable donation or refunding expenses to the SPACE for raw materials used. Facility wear and tear is too nebulous to refund so I wouldn’t try that. The American IRS would raise their eyebrows on that, Whatever the president does with the donations is up to him and/or the BoD (if they have one).

          3. Doug – In that scenario the BOD does not have to share any proceeds from donations with the other members. The charitable donations should be used to enhance the SPACE not the members. I’m sure most members would not have any trouble with that. What is the real reason why they are there? To have fun with sophisticated SPACE assets and amenities or get-rich-quick? Even if it turns out to be a windfall for the SPACE it should all be spent on SPACE amenities. And SPACE staffers that volunteer their time should not expect a remuneration of any kind EXCEPT expenses. If the BOD agrees they can make a subcontractor agreement with the member as a security guard, office manager, or property manager function and be paid via a periodic contract just like a landscaper, plumber, or snow-plower. A subcontractor payment is only a MakerSpace general EXPENSE not a employee payroll expense – also requiring WC coverage in some states (USA).

            I really like [ERIC WRIGHT’s] idea to setup the SPACE’s insurance policy as a year long EXPO of sorts. Next year just renew it for another year.

          4. @sonofthunderboanerges

            Not-For-Profit is a State tax class, Non-profit is Federal. They have separate requirements to meet.
            As for the marketing products, so long as community funds aren’t used to the benefit of one person you should be in the clear. Using the ‘space to send emails &c should be fine, as you would do the same thing at a public library. It would basically come down to what’s in the articles of incorporation.

          5. Leithoa – “Not-For-Profit is a State tax class, Non-profit is Federal. They have separate requirements to meet.
            As for the marketing products, so long as community funds aren’t used to the benefit of one person you should be in the clear. Using the ‘space to send emails &c should be fine, as you would do the same thing at a public library. It would basically come down to what’s in the articles of incorporation.”

            Excellent information!

            However, knowing the IRS, as I think I do, I would not want to incur their collective curiosity at the SPACE based on a misconception they came to due to some vindictive IRS informant or something the local enforcement agent saw in an local advertisement that had the MakerSpace predominately depicted as the central theme of an entrepreneur-members’ ongoing marketing schemes. I mean nothing official would probably happen (no audits). But he might come knock on the door, leave a door knob hanger to call him, or send a letter to call him to discuss this matter.You wont be in trouble but the IRS’ curiosity can be a sticky thing. Like them being on a fishing expedition or something.

            Like you say you could make everything be OK and above board, but who wants that headache? I would tell the member to please use the SPACE facility for building your idea, but market it elsewhere to keep the taxman away.I wouldn’t need more work than I need. I’m already too lazy for that… :-P

    1. RMD – You can do that… however, you need to tell the Principal (aka headmaster) or parents to supply you with GL/COIs for each kid and make the parent’s sign HHA’s for each child. The kids can NOT sign anything. The school systems are no stranger to insurance implications of field trips and are totally prepared to comply – even when not asked. They have people dedicated to insurance compliance at their BoE.Just limit your building capacity size and tell everybody to keep their hands in their pockets! Hold up a Halloween severed hand with severed fingers and say: “This is what happened to the last guy that didn’t…” (then laugh out loud like a nut) :-D

  2. Kristina Panos – Loved your article. It was kinda’ sorta’ my bally-wick. I’m into loss mitigation and stuff like you mention. Here is an innovative way to mitigate the costs of GL and PROP insurance for your MakerSpace (Verify all of this with your personal attorney and/or insurance agent.):

    1) Only get full PROPERTY coverage to cover the “contents” of your stuff inside the landlord’s building. His coverage handles the building itself.

    2) Require all members to provide you a copy of their COI for personal general liability coverage. Their COI should show that they and their guest companions have full GL coverage while being in the MakerSpace facility. That would cover slip falls, accidental injury, accidental death, etc. And it covers whatever they might do to injure others there too. That means the cost will be on the individual members NOT the entire community. They would be like subcontractors coming to do something for you. COI means Certificate of Insurance. The MakerSpace president or leader is also required to comply too.

    3) Require that #2 also puts the MakerSpace on the policy as an AI (Additional Insured). This covers the MakerSpace for GL too. But only things that particular member does to cause a insurance claim. An AI makes it easier for the MakerSpace to file a claim with the insurance company without the member’s intervention or permission.

    4) Have all members (and their guests) sign a HHA (Hold Harmless Agreement) before entering the facility. This absolves MakerSpace from anything that happens to them physically while they are there. Make sure you verify signatures via their driver’s license that’s so they can’t say they never signed the HHA in court when they try and sue the MakerSpace.

    5) To avoid having to get WC (Worker’s Compensation) coverage, make sure that any staff members are considered subcontractors (SC) or independent contractors (IC). Whether you pay them or not is up to MakerSpace. If you do pay them don’t do it by per diem, salary, or hourly pay. Pay them as a periodic “contract” payment. The same way you’d pay your landscaping or snow-removal SC or a plumber. IC’s don’t get any benefits and the only US tax requirement is a 1099 form. It’s better that staff is all volunteer and only payment to them is their direct expenses like gas, taxi, bus, meals, refreshments, etc. Tell them to keep receipts and you keep a copy of them. Oh yes get a copy machine or fax machine to copy all these documents.

    6) Consider incorporating as a LLC (Limited Liability Corporation) – this is obvious as it tends to legally insulate everyone from the MakerSpace itself.When someone tries to sue the MakerSpace it normally does not involve it’s members too – unless the are specifically named in the law suit. But that sort of law suit is ill-advised and not prone to be a viable pursuit.

    7) Think about filing for NOT FOR PROFIT status in USA (501-c). In a MakerSpace scenario it is in your financial/legal favor not being thought of as a for-profit company.

    8) Pay particular attention to I.P. (Intellectual Property) – aka inventions. Some members may become very upset if somehow their IP is introduced in a for-profit scenario by another member and they were never included or asked for their permission. That’s why NDA’s are needed (Non Disclosure Agreements). Also you might put a clause in the HHA #4 covering IP too. Keep NDA blanks handy in the MakerSpace file cabinet.

    9) Install CCTV (or web cams) throughout your MakerSpace to record all activity. You’d be surprised when someone tries to file sexual harassment or some other “he said she said” scenarios. Include audio too. Just put up a sign about CONSENT TO MONITOR is authorized by them remaining in the space. Good for burglars and member-theft too. A private web-streaming feed would be cool too to inspire MakerSpace interest. I think members would appreciate the implied security of monitoring. The loop could automatically erase after 1 week or a month to conserve memory and only be motion sensitive. Or just use those new cheap Walmart dash-cams.


    1. About 1) Isn’t his coverage supplier going to sue you back to the stone age (Shaddup I LOVE mixing metaphors) if you happen to damage the fabric of the building? …. like someone unhooks the dust hose from the sander and the resulting fuel air explosion takes the roof off.

      1. Point one doesn’t preclude liability insurance coverage. Only a group operated by the ignorant would try to get by without liability insurance that covers damage to the property of others cause by your group’s activity.

        1. Doug in my scenario EVERY member of the SPACE, including president and BoD, carries a personal GL policy while at the SPACE. The overall expense is not on the SPACE but each member separately. The President would present copies of their COIs to the landlord showing that GL is covered by anyone who might cause bodily injury or property damage by direct or indirect actions of the insured member. The alternative I think would be a commercial GL policy covering all members (and guests) which I think might be expensive. In any case the SPACE would still have PROPERTY coverage which it had to pay for. That Property coverage would cover the landlord’s property the SPACE may have damaged indirectly or directly and the SPACE’s contents.

          1. Rob – Then how to I emphasize the word “EVERY”? How do I differentiate the nickname SPACE for MakerSpace and not confuse it with the simple noun “space”? BoD means ‘board of directors’. Would you have preferred “bod”? GL and COI are industry standard acronyms. Maybe I should have mixed-case PROPERTY to Property. So sue me!! :P

    2. 1) Bad idea. If you’ve already signed a lease, then you’ve probably made promises to your landlord about the type of insurance that you will carry.

      2) Most likely unworkable. While most people have general liability insurance coverage (homeowners, renters, etc.,), a lot of people do not. Insurance policies may change at anytime and at least once a year. Tracking insurance information for 100 members could easily become a full-time job.

      3) Most likely unworkable. For the same reasons as 2) and because adding an additional insured to a policy is generally an additional cost for the policyholder.

      4) Good idea. However, not as useful as is claimed here. Also, depending on state law, makerspaces may be strictly liable for injuries occasioned by a faulty, or lack of a, machine guard.

      5) Bad idea. I can’t even begin to describe how terrible this advice is.

      6) Bad idea. A lot of factors need to be considered when deciding on the corporate form, and laws vary state to state.

      7) ??? I can’t speak to the financial incentives, but state laws that afford greater legal protections to non-profits are dictated by state approved corporate forms and not whether the federal government sees you as tax-exempt.

      8) Most likely unworkable. I would be surprised if the “open source” type of crowd that is attracted to makerspaces would be willing to sign non-disclosure agreements. Anything is possible I suppose.

      9) Probably a Good Idea.

      1. I defer to you, as according to your moniker you are a lawyer (IAAL). However, I would not say I was giving “advice” as I am not qualified to do that in any way shape or form. I was just offering my layman opinion or suggestions. I said to verify what I said before doing it. Even if you feel some of them are “bad ideas” or “unworkable”, they are still arguably good things to think about and to be brought up to your lawyer and/or insurance agent when thinking about setting up a MakerSpace.

      2. Re 5):

        I have been both a subcontractor and an independent contractor in my 50-year career. As an SC and IC, I was required to provide proof of liability coverage. That insurance cost me $1,000/year. If the IRS decides that you are not actually an SC or IC, but an employee in SC/IC clothing, both you and the company are in for some Really Bad, and Really Expensive, times. I finally incorporated myself when I was offered a job in software research, but the company rules forbade hiring me. However, they had no problem hiring a corporation, even if it had only one stockholder, a board of directors of only one member, and one employee. Many of the companies I worked for requested my insurance company to inform them of any decrease in my coverage (this stops the practice of getting insurance, then dropping it immediately after getting the job).

        See https://www.mackinac.org/archives/2012/IRS20FactorsTest.pdf. The 20-point test of §1706(a) of the U.S. Tax Code starts on page 4. Having outside contractors who have fixed hours, must be on the premises, are subject to supervision by an actual employee, and can only do their job on the equipment in the shop, makes them employees beyond any question. And in any confrontation with the IRS over their status, you are DEADBEEF.

        If you have employees, unless one of them is a full-time, trained, payroll manager, hire an outside firm to do your payroll. The number of things an untrained person can get wrong are each extremely expensive mistakes. For example, failing to file a 941 report on time. And if you don’t know what that is, or how much it costs you if it is one day late, that’s why you hire a payroll firm. Most can do direct deposit, and all take liability for conformance to tax law reporting and payment requirements, except if the Electronic Funds Transfer from your account to the IRS bounces because of Insufficient Funds. Find a good outside accountant with a CPA license, who has experience with nonprofits. Get QuickBooks (or equivalent) and never get more than a day behind in entering data. Seriously.

          1. John Rockefeller – Oh OK then… That’s what the “shrinks” call “cognitive dissonance” (aka CD) or “…the state of having inconsistent thoughts, beliefs, or attitudes, especially as relating to behavioral decisions and attitude change.” So in summary your belief that my “other” postings elsewhere where “waco” or “insane” may need to be wholly reconsidered.

            The reality for your CD is based on your paradigms of what you feel is rational and what is not. You think my off-thread postings where irrational when in fact they where just outside your realm of subject matter knowledge-base. Could your belief of my sanity be based on your ostensible super-inflated ego? Could you be a multiple-identity-HaDer only exposed by IP address comparison by Mr. BB (our uber-moderator)? It seems odd that IAAL and Waterjet seem so comparable. And now JOHN ROCKEFELLER? What an odd choice of monikers to just pop-up out of nowhere with an in-depth opinion of my alleged state of sanity that only Waterjet might have of me due to our past HaD experiences.

            Don’t get me wrong, I like Waterjet, I think we are kindred-spirits. And I like that. I just wish we could discuss where this “waco” stuff originates. If I were given the chance I might be able to connect some dots for him to help dispel his CD of me.

            Just sayin…



  3. The other hard thing here is that local and state regulations vary widely. For instance, we do have insurance on our building as required by our landlord and is common in our state.

    Also people get freaked out about the potential for injury and being sued. Its sometimes hard to get past that fear and negativity. But really, unless you are being dumb, theres no reason to let that hold you back. And by being dumb I mean allowing unsafe activities to happen or continue to happen in your space. Or allowing meth heads to run amok in your workshop. When you are starting out its easy to weed out trouble like that. This also helps build a culture of positive and safe use of the space.

    1. “Only get full PROPERTY coverage to cover the “contents” of your stuff inside the landlord’s building. His coverage handles the building itself.”

      You had better double check that. Most landlords typically require you to have coverage in place for their building as a prerequisite to rent the space to you.

      “This absolves MakerSpace from anything that happens to them physically while they are there.”

      Are we talking about the real world here? Because I am pretty sure this is not an accurate statement yet it is being touted as such.

      “When someone tries to sue the MakerSpace it normally does not involve it’s members too – unless the are specifically named in the law suit. But that sort of law suit is ill-advised and not prone to be a viable pursuit.”

      Uhh, no. The suit typically will name more than just the LLC.

      “Think about filing for NOT FOR PROFIT status in USA (501-c). In a MakerSpace scenario it is in your financial/legal favor not being thought of as a for-profit company. ”

      *face palm*

      Be advised that this is a mixture of IANAL speak combined with bad advice and a few tidbits of actually useful statements.

      1. Waterjet – Yes absolutely IANAL! I intimated that in the statement to verify this stuff I said before doing it.

        I did say FULL property coverage. I did not mean that it ONLY covers your contents. I may have miss-worded that. I totally see how the MS (MakerSpace) would be liable for property damage in your scenario.

        My comment about HHA’s is better described here:: A hold harmless clause is a statement in a legal contract stating that an individual or organization is not liable for any injuries or damages caused to the individual signing the contract. An entity may ask an individual to sign a hold harmless agreement when the individual is undertaking an activity that involves risk for which the enabling entity does not want to be legally or financially responsible. This clause is also known as hold harmless provision.

        When a plaintiff brings a lawsuit against a MakerSpace LLC, is it plausible that the judge will allow naming members which are ostensibly unrelated to the LLC? Wouldn’t you have to show ’cause of action’ for each member named? Wouldn’t that mean SEPARATE lawsuits if so? To my IANAL self it seems frivolous too me to name members who never had anything to do with the original COA..Of course the LLC will still have to have its day in court. I did not mean that a LLC means you can never be sued. I think it just limit’s YOUR liability as the principle – I am not sure about that.

        The 501(c) mention was just my idea to setup a legal tax-shelter for your MS. Yes I imagine that some of the more financially driven members may try and introduce some entrepreneurial ideas while at MS. I would think the president of MS would advise the member that his/her for-profit-gambit should be kept separate from the MS. Any profits he/she makes can be funneled back to the MS via charitable donations or a remuneration of expenses. Even though IANAL I thought it was a good idea.

        I’m sorry if I came off as dogmatic and an authority… my only intention was to be helpful to HaD not a DIY lawyer.

    2. dosman – +1

      The MakerSpace I’m planning on joining soon has that covered. Before anyone is allowed to operate ANYTHING potentially dangerous you have to wait a trial period in where you can prove to the senior members you are qualified to operate such equipment. The president is an insurance guy too.

      And I would advise ALL MakerSpaces is to strictly enforce PPE (personal protection equipment) rules. Make an investment to go buy PPE’s from Home Depot/Lowes or ask for PPE donations. When your insurance company sends a insurance inspector by your MakerSpace that’s the main thing he will want to see while members are operating dangerous power tools.

      Just a thought: when registering what type of organization your MakerSpace actually is with your insurance agent, call yourself a “social club with private membership”. Anything to let them know you are not a company, business, entrepreneurial startup, etc. Also tell him you NEVER serve ethanol nor cook food in any form at the MS facility. Some social clubs do that. Also limiting access with keylocks, CCTV cameras, and burglar alarms will go a long way with your insurance underwriter deciding your premiums. Also all those copies of GL COIs with AI’s from members will also help the agent see that you do have GL coverage which would reduce your costs as the member is paying for it. (See my posting at July 19, 2016 at 12:00 pm for more info).

      P.S. – Welding with compressed gases is OK but the insurance company grits their collective teeth when they hear that. They love to hear that you send out the welding work to off-site subcontractors (i.e. welding shops). And get a really professional first aid kit and mount it in a conspicuous location. It wouldn’t hurt to sponsor free Red Cross CPR classes to. If you can afford an portable AED (with RC training) that would help too. Maybe even save a life or two.

      PPS – I don’t advise giving any member 24-hour cart-blanche access UNLESS you really trust them implicitly. But that doesn’t help if at 3AM they fall down with a heart attack and no one finds out until next MakerSpace staffed hours. A streaming Web Cam may help that. Or at least some sort of panic button alarm that calls everybody for help.

  4. Kristina,

    Would you be interested in putting together a presentation version of this and presenting it at our ‘Making the Makerspace’ conference? I think it could be a very valuable addition!

      1. Kristina Panos – Kris, if you do put together a PPT presentation for what komradebob is referring to, please don’t think IAAL’s subjective opinion of my suggestions above where to be discounted out of hand. You noticed he offered no dissenting explanation of anything – only nebulous negative comments. I would hope you would research my suggestions for validity and get a real professional to critique them. I think they are all workable and not bad ideas at all. They could be added to your presentation as talking points or discussion points for your Q&A part of the presentation. Attendees could offer their own critique and opinions of my suggestions. You could do it as a brainstorming session of sorts. They are always fun as the moderator writes down valid points on a paper easel.

  5. Just a thought train here for comment….

    Why not an Educational institution like a University as a conforming non profit type model? Somehow they manage to navigate spawning off startups, taking research contracts from industry, patenting discoveries, and remain non-profit. It would seem that one would only have to run some classes and do some public lectures to qualify. Then style the rest of the activities as free form open access education.

    Then also, aren’t there insurance companies around that are familiar with workshops in educational institutions?

    1. Educational institutions fall under the same 501c(3) tax exemption. They use the same clause as ‘spaces to get their exemption.
      One of the easiest things a ‘space can do to help fulfill exemption requirements is start a library & provide bibliographic information of any educational texts.

  6. I’ll also add that purchasing a SawStop tablesaw and pointing that out to the insurance company saved us about $1k/yr. Paid for itself pretty quick.

    We do say ‘if you trip it, you pay the $90 for the cartridge and the new blade. ‘

    1. That’s a nice idea. Getting all idiotproof machines, Tends toward needing high capitalization for a startup though. Leaves the idea of bootstrapping it into being with old and donated equipment dead in the water though.

      Because then we get into the problem of better funded already established hackerspaces setting an example with copious safety foolproofing on everything, and sooner or later a lawyer can point at them and say “standard practice” when a rich idiot as much as shaves his finger at fledgling space with basic equipment, and all of a sudden, it’s impossible to start a new hackerspace without several million dollars up front.

      I understand it’s better to be safer, it’s just an observation on how the system is eventually and inevitably going to screw us over.

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