Once you are ready to turn your hobby into a business, it is important to look into insurance. Every business needs insurance. It is reckless to operate without it. Here are the different types of insurance that you might need.
General Liability Insurance
What is general liability insurance?
“Liability insurance (also known as Commercial General Business Liability) protects a company’s assets and pays for obligations – medical costs, for example –incurred if someone gets hurt on your property or when there are property damages or injuries caused by you or your employees.
General liability insurance can also protect you against any liability as a tenant if you cause damage to a property that you rent, such as by fire or other covered loss.
Finally, it can also cover claims of false or misleading advertising, including libel, slander, and copyright infringement.” – SBA.gov
For example, most craft fairs and some farmers markets require that you have general liability insurance in case a customer is injured at your booth or by your products.
Product Liability Insurance
Because we live in a litigious society, you want to make sure that you are protected in case your products damage something or injure someone.
What is product liability insurance?
Product liability insurance protects you against claims that your product injures somebody (the customer) or damages something (property).
For example, if a customer uses your product and has a bad reaction to it, they could blame you and sue you for damages.
Or maybe a customer uses your body scrub and slips in the tub, breaking their arm.
You get the idea…
Professional Liability Insurance
Professional liability insurance is for those that teach classes. It protects you if a student causes damage or is injured while using your instructions.
So what are your options?
Handcrafted Soap and Cosmetics Guild
The HSCG offers insurance (+ organization membership) to soap and toiletry makers. They offer a general liability + product liability insurance package with optional professional liability insurance. Check out their FAQs page to get more info.
(1/5/2017 Update – Be sure to check out the HSCG’s less expensive option for those that don’t need property coverage.)
Indie Business Network
IBN offers insurance (+ organization membership) to makers of handmade items including soap, toiletries, jewelry and other items. Check out their insurance options here.
Veracity insurance offers product liability insurance for the Beauty and Cosmetic industry. You can get info here.
Handmade Artisan Insurance
“The HandMade Artisans Risk Purchasing Group insurance program provides the necessary business general liability coverage to protect you and your business and to satisfy most insurance requirements typically needed at fairs, exhibitions, markets and other venues. The cost of the annual coverage is group discounted at more than 40%. The HandMade Artisans Risk Purchasing Group insurance program is available 24/7 online.” – HandMade Artisan Risk Purchasing Group
Check out Handmade Artisan Insurance here! At the time of this blog post, the insurance cost starts at $275.
K & K Insurance Group (Professional Liability)
K & K is who I’ve used for professional liability for years. I don’t sell products so even though I belong to both the Handcrafted Soap and Cosmetics Guild and Indie Business, I don’t partake in their general liability insurance. I simply don’t need it.
A Note About Homeowners Insurance
I know a few people who have had success in adding a rider or something to their homeowner’s insurance to cover their business. I also know of a few people who had their homeowner’s insurance canceled for even bringing up the idea of running a manufacturing business out of their home. So check with your insurance provider to see if your homeowner’s insurance will cover damages if created by your business.
This is only an overview on insurance. I hope it helps you in your quest to find the right insurance provider!