Product liability insurance; It seems to be the last thing people think about when they plan to start selling their products. Weather your plan to sell one or one million, it's really the first thing they should have. Since I've been asked about this subject several times in the past weeks alone, I thought with the upcoming season of high sales and craft shows it was the best time to blog about it and give people some help in finding a policy that fits their needs. In our litigious society, people sue readily so it's best to be covered!
What is product liability insurance you ask? Product liability insurance protects the business from claims related to the manufacture or sale of products, food, medicines or other goods to the public. It covers the manufacturer's or seller's liability for losses or injuries to a buyer, user or bystander caused by a defect or malfunction of the product, and, in some instances, a defective design or a failure to warn. In a nutshell, it will protect you, the manufacturer of the products in the case of a lawsuit up to the dollar amount you are insured for.
I have found that area by area and state by state coverage's will vary as will companies that sell policies. I have been in the same shoes as you are now and I know how frustrating it can be. We were dropped 2 months into our first renewal. It seems that as we got bigger, fewer companies want to deal with the liability although my premiums keep making them more and more money. I have yet to have a claim in all my years.
Although I cannot help you find an agent or a company in your local area, I can help you find new coverage. If you or any other person who is finding themselves in need of coverage, follow this you will find insurance.
- Open the local Yellow Pages and look under "Insurance". I know this seems very obvious, trust me sometimes it is the LAST place people seem to look. You can also try an internet search engine and search for Commercial Business Insurance in your area.
- The size of your area will dictate what is shown in the
Yellow Pages. If you live in a smaller area, this may be a single page where
as in a larger metro area it is likely to be broken down by insurance
type. If you live in a larger area, be sure to look for
"Commercial" or "Business" Insurance. Most agencies do
not cover commercial needs as they are highly specialized so looking at
companies that primarily insure Home and Auto are not what you want.
- Look for "Insurance Brokers". These are
smaller independent agencies that deal more with specialty policies and
unlike State Farm, and Prudential, etc., they deal with a variety of
carriers and can generally handle just about anything that needs to be
- Ask for the proper coverage. You need General Liability
as well as Product Liability. So many candle makers out there only
have General but no Product, and that is not going to cover you in the
case of a faulty product claim.
- Generally it's best for crafters to insure for $1-5
Million in coverage. $1 Million is acceptable in some areas, $1 million is
not enough in others. Look at the areas that you will be selling in.
- Finally, get as many quotes as you can. We found that policies can be exactly the same in coverage but can cost you in some cases 100% more than the next company. It really pays to shop around for this kind of coverage!
Indie Beauty Network www.indiebusinessnetwork.com
Handcrafted Soap Makers Guild www.soapguild.org.
Good luck in your quest to find insurance. If you know of other guilds or groups that offer insurance at a special rate to their members, please let me know at firstname.lastname@example.org and I will get them listed along with the above.
Happy Candle & Soap Making!