Insurance: What To Look For

If you are looking for insurance for your business and handmade products, what should you look for? What's important? How do you compare the different options you might have? Read on.

Why you need insurance

If you manufacture or sell handmade soaps or cosmetics to anyone, you need the protection that comes from having insurance. If you don’t have insurance and something goes wrong - a client claims your soap gave them an allergic reaction, someone claims you mislabeled your product, etc. - your business assets could be in jeopardy. Don’t take that chance. Insurance provides safeguards that can not only protect your business finances, but it also gives peace of mind as you manufacture and sell your products.

What coverages should you obtain?

Finding the right insurance policy isn’t as difficult as you might think. While there are many insurance companies that will offer you insurance, the most important thing to look at is the coverages and the coverage limits the policy offers. Some of the coverages that should be included in your policy include:

CoveragesAmounts
General Liability$ 1,000,000Aggregate
Product/Products Completed Liability$ 1,000,000Aggregate
Personal and Advertising Injury$ 1,000,000
Damage to Premises Rented to You$ 300,000
Medical Expenses$ 5,000
Business Personal Property/Inland Marine$ 5,000

Having insurance won’t do you any good if your policy doesn’t include the right coverages and coverage limits. For example, some insurance companies do not include Business Personal Property/Inland Marine in their policy. This coverage protects your supplies, equipment, inventory, and other property you need for your business. If these items are stolen or damaged, it could do serious harm to your business. If you have that coverage in your policy, however, it will be a lot less stressful.

Other Important Considerations

While coverages and coverage limits are the most important factor to look at when choosing a policy, there are other important considerations to think about as well. Some important questions to ask yourself about the policies you are looking at include:

  • What is the price? The simplest rule is to make sure you are getting the least expensive policy that still has all the coverages you need. Doing that will make you happy now because of the price and in the future if you need to make a claim because you have the right coverages.
  • Does the policy contain property coverage? If you have business property, you need to make sure that any policy you choose has property (inland marine) coverage. Without property coverage, you have no protection if something happens to your stuff.
  • Is the policy available in all 50 states? What would happen if you bought a policy in California and then had to move to Texas, where the policy might not be covered? The easier option is to just purchase a policy that is available in all 50 states because then you don’t have to worry about it.
  • Is there a revenue cap? Some insurance companies will only insure your business up to a certain revenue. Look for an insurance policy that will stay with you whether you earn $1 or $1,000,000 or more.
  • How much to add an additional insured? Sometimes you need to include another party - such as an event or a landlord - to your policy. Does the insurance company charge you money to add additional insureds? While it’s not necessarily a deal breaker if they do, the best option is to have a policy that allows you to include additional insureds for free.
  • What grade does the carrier have? Reputation is important when it comes to insurance. Insurance carriers with an “A” grade are usually the best to work with.

These are just a few of the other factors you should consider when deciding which policy is right for you. By doing some research and looking closely at the policy details, you should be able to find the right insurance for your business.