No matter your business, you should have product liability insurance in this day and age. Not only does it make you look like a professional company, but it protects you and your business against potential liability claims against your products.
When people sue large companies like McDonald’s for having hot coffee, which is clearly marked as such, then you are just as likely to be faced with frivolous as well as warranted legal actions against you or your business. It does not matter that you put on the label that allergies caused by your product are not your responsibility or that your candle has a warning label not to leave it burning unattended. If people don’t know that hot coffee is hot, what makes you think you are protected with your warnings? A lawsuit without insurance can cost you a lot, including your family assets, even if you win.
Where does one find product liability insurance for a small business? There are several affordable options.
Homeowners Insurance – Some homeowner’s policies will cover small businesses that operate out of your home up to $5000 in sales. Be sure to let them know that you want product liability insurance.
RLI -RLI offers business insurance for crafters. The pricing varies based on what you are making and how much liability coverage you want, but they generally cover up to $5000 in sales. They do not cover candle makers (or soapmakers that also make candles – in other words, candles are off the table). You can look at rate quotes online. Typically, you can get a policy for around $200-250 per year, making it affordable for new companies or those that have low sales.
Handcrafted Soap and Cosmetic Guild – HSCG offers a group policy for the soap and cosmetic industry. It is included in the price of membership (membership is $100 and insurance is $375). The annual coverage is for $1,000,000 and there is a $5000 property insurance included. You can also purchase more property insurance or add $1,000,000 in coverage for additional fees.
Indie Business Network – IBN provides a group policy for the soap and cosmetic industry. It is $398 per year for $1,000,000 in aggregate insurance for product liability. You can buy an additional $1,000,000 in coverage for $55 more. You must be a member of IBN, which is $150 per year, in order to buy the group insurance.