HSMG Member Benefit Insurance FAQ

General Information

Why is it called "member benefit insurance"?

It's "member benefit insurance" because it is an integral part of the membership benefits for Soapmaker Members, not an optional add-on.

Why did the HSMG decide to include insurance as a member benefit?

The HSMG implemented the member benefit insurance program in September 2006 as a way for soapmakers to have access to reasonably priced insurance. It was at a time when insurance options for small businesses were severly limited. The lack of affordable insurance was threatening many members' ability to stay in business and making it extremely difficult for new soapmakers to start businesses. The industry as a whole was being potentially crippled.

Why can the HSMG offer such good rates?

These rates are based on having a large group of participants. We have enough participating members to make it worthwhile for the insurance company. With many members it reduces what the insurance companies call "adverse selection". Adverse selection is the idea that the people who need insurance most will buy it (like a sick person wanting to get health insurance). When everyone participates, the insurance company knows they aren't just getting the people who feel they are likely to have a claim, so their underwriters think there is less risk - and the price goes down. The whole idea may or may not be true, but that's one of the things they take into account when calculating the insurance premiums.

Who qualifies for the HSMG member benefit insurance?

An HSMG Soapmaker Member who resides in the 50 US states, Washington DC or Puerto Rico (other US territories are excluded). Also, in order to qualify more than 80% of your sales must come from handcrafted items.

Do I have to have a business in order to qualify for the insurance?

Anytime you make and sell products it can be considered a business, even if you only do it in your own name as a sole proprietorship. You don't have a registered business name to qualify - and the HSMG won't be checking your tax returns as to how you report any income you get from selling your soaps!

What is meant by "handcrafted"?

The term "handcrafted" may mean something different to each person. Within the HSMG and for soap we have defined handcrafted as being more than 50% made by hand. Since the policy covers more than just soap, for purpose of this policy, "handcrafted" (or "handmade") means you either made it from scratch by hand, someone under your control made the product from scratch by hand or you purchased the unscented and/or uncolored product in bulk and added your own scent and/or color and/or other additive to distinguish it in your line of products. If 80% or more of your products are "handcrafted" within this definition, then they qualify for coverage under this policy.

Products that are made for you by an outside company and which you purchase packaged and ready to go do not qualify as handcrafted.

Can I join the HSMG as a Soapmaker and not get the member benefit insurance?

Yes, under certain circumstances.

Outside the US: If your business is located outside the US and you don't have a physical address within the US where work related to your business is performed.

Not handcrafted: If more than 20% of your annual revenue comes from the sale of ingredients, supplies, products that are produced for you complete and ready to sell, and/or non-consumer products such as consulting or other services.

Already Insured: If you already have product liability insurance, you can request that the member benefit insurance portion of your Soapmaker Membership be waived.

About the Insurance Coverage

How much does the insurance cost?

The insurance is included in the membership benefits for Soapmaker Members. A Basic Soapmaker membership in the HSMG is $500.00 per year.

What is the coverage?

This is a Commercial General Liability policy. The general limits are:

$1,000,000	General Aggregate Limit
$1,000,000	Products-Completed Operations Aggregate Limit
$1,000,000	Personal and Advertising Injury Limit
$1,000,000	Each Occurrence Limit
$100,000	Damage to Rented Premises Limit
$5,000	Medical Expense Limit

There is also Miscellaneous Articles coverage which includes "miscellaneous property of a floating nature" It basically covers "property you own or is in your care, custody or control", like when you go to a show or have items on consignment in a store. The limits are:

$1,000	Per article Limit
$5,000	All covered property in any one occurrence
$100	Deductible

Can the limits be increased?

Yes.

Increased Liability - The insurance company offers an additional $1 million in coverage (making it $2 million total). The cost is $55.00 in addition to the regular membership. The additional coverage is optional and is being offered because some fairs/shows and wholesale buyers require $2 million in liability coverage. When you sign up, you will be given an option to purchase the increased insurance.

Professional Liability - If you teach soapmaking in a professional capacity, you can get additional professional liability coverage that will cover you if a person claims what you taught them caused damage or liability of some kind. The cost of the professional liability insurance endorsement is $135 per year. To add professional liability coverage, call Stratus Insurance.

Property Insurance - If you need additional property insurance (over the $5,000 already included) you can increase the limits. Up to $10,000 in coverage is an additional $75; up to $20,000 is $125; and up to $30,000 is $175. Higher amounts are also available, but requires an application process. Contact Stratus Insurance if you want to increase your property insurance limits.

Who is the insurance carrier?

The carrier is Great American Insurance Group.

Who is the insurance broker?

The insurance broker is Stratus Insurance Services, Inc.. They can be contacted at (866) 395-1308 or by email at hsmgins@veracityins.com.

Can I read the actual policy?

Yes. See Great American Insurance Policy for the current policy. It is viewable in full as a .pdf file. For policies that expire prior to September 31, 2011, see the earlier version of the policy. Note: the file sizes are pretty large; you might want to right-click and "save file" to your computer.

What products are covered?

Soaps (of course), lotion, bath salts, perfume, essential oils, fragrances, candles, jewelry, clothing, fragrance oils, base oils, waxes, powders, masks, scrubs and just about anything else that is used to beautify the body, the home or the environment and is handcrafted. This list is not a full list, but a representative sampling of the kinds of products covered.

Pet products are covered if they are handcrafted by you. If they are made elsewhere and repackaged by you, or you buy them in bulk and repackage them, they are not covered by this program.

Coffee, tea and other consumables are covered only if they are prepackaged and sold in a set (such as a gift basket) in conjunction with handcrafted items that are covered as above. If they are sold separately, they are not covered.

Are there products that are NOT covered?

Except as noted above, the policy does not cover ingestible products (anything to be eaten), especially drugs, pharmaceuticals, vitamins and supplements.

What if I only make candles or cosmetics and not soap?

Well, this IS the Handcrafted SOAP Makers Guild! To qualify for a soapmaker membership (and thus the insurance) you must make and sell handcrafted soap. It doesn't have to be any particular percentage of your total revenue, just so long as it is somewhere in your product line. Remember, however, that the other benefits of HSMG membership are geared towards soap making.

If you don't make soap and don't want to add it to your product line, then you don't qualify for membership in the HSMG and will need to look elsewhere for product liability insurance.

The policy has a "fungi exclusion". What does that mean?

The policy excludes fungi and mold that affect a structure and which could be harmful. It doesn't exclude fungi or mold if (heaven forbid!) it got into your product and caused you some liability exposure.

The policy has a "hazardous materials exclusion". Does that include lye?

The policy excludes covering hazardous materials and any kind of cleanup of hazardous materials. If you or your employee were damaged by lye (or slipping and falling in the workplace) it wouldn't be covered under this policy anyway.

However, if a customer is harmed by your soap because it's incorrectly made and lye heavy (heaven forbid again!) you would be covered for any potential liability exposure. Or if you were doing a demonstration and a public viewer was splashed by lye or unsaponified soap and sued you over it, you would be covered.

What about Additional Insureds?

You can get up to 5 Additional Insureds during one calendar year. If you need more, the certificates are issued at $25.00 each.

Does the insurance cover home based businesses?

Yes. This insurance is mainly liability; it doesn't cover your premises or stock, so it doesn't matter if you work out of your home.

Is there a cap on gross revenues with this insurance?

No, but remember that this insurance covers product and general liability. If you have expensive equipment, a retail establishment or other valuables they are not covered by this policy unless you get additional property insurance.

Can I make installment payments?

No. The membership dues (which include your insurance) must be paid in full before your membership and insurance become active.

Is the premium refundable?

No. The policy becomes effective as soon as payment is processed when you join HSMG. The policy will cover you for a year in exchange for payment in advance of the policy premium. You may choose to renew it or not when it expires, but it is in place for a year and the premium is not refundable.

Who do I call if I have questions about the insurance policy and what it covers?

Contact Stratus Insurance at hsmgins@veracityins.com or (toll free) 866-395-1308.

How does the HSMG Insurance Program work?

How do I sign up and get the insurance?

Just join the HSMG as a Professional Soapmaker Member (and be located in the US or Puerto Rico). Your insurance will be in force as soon as your payment is processed and you will receive a link to your Certificate of Insurance by email shortly thereafter. You can download the insurance policy as a .pdf file at any time (you will not receive a copy of it by mail).

What if I need MORE insurance than is provided with the HSMG member benefit insurance?

There is an option to increase your liability coverage to $2M. If that still isn't enough, contact Contact Stratus Insurance at hsmgins@veracityins.com or (toll free) 866-395-1308 to see what can be done to fill your needs.

What if I already have insurance?

You can get a Soapmaker Membership with the insurance waived so you aren't paying for double insurance just to be a member of the HSMG. You can sign up for a Professional Soapmaker Membership with insurance waived.

You'll have 15 days after that to complete get your waiver, which has to come from Stratus Insurance.

What is the waiver process?

The waiver process is a simple formality to verify that you do have coverage. Your existing policy should have a cover sheet (also called the "deck page") that summarizes your policy coverages. You just email, fax or mail a copy of the deck page to Stratus Insurance. They review it and let us and you know that it's okay.

You will receive complete directions on how to complete the waiver process when you sign up for your membership.

I have a question that isn't answered here

Contact Stratus Insurance at hsmgins@veracityins.com or (toll free) 866-395-1308.