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Need for liability insurance


scifichik
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Hubby and I were discussing turning my hobby into a side-business and we are at a standstill on the point of the need for liability insurance.

He says: I doubt every crafter with a booth at the craft mall has liability insurance AND you put the safety label on the bottom of every candle you make, even for a gift, so that should protect you.

He says: wait until you see if this is going to "take" and then contact an agent about insurance.

Anybody have some good counterpoints I can bring up?

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This topic is a real hotbed for me because it's such a no brainer, but I guess there a lot of no brainers out there cause it keeps coming up. Even if you are making candles as a hobby and already selling you are very, very foolish for not having product liability insurance already!! Your husband is dead wrong about the warning labels protecting you. If someone burns down their house because of your candle, tester or buyer, whether it was your fault or not, without insurance, you can bet you will lose everything you own trying to defend yourself.

You should have had insurance in place before you made your first candle.......period, end of discussion. Not having insurance can and will put your whole family in jeopardy and in my book that's just plain stuipidity!! :lipsrseal

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Ditto what ChrisR said. We live in a litigious society. Who cares what the other crafter's at the mall do? It's your responsibility to protect yourself. Unfortunately, my insurance company only covers me for my soap/bath and body stuff and tarts. They don't want to have anything to do with anything that catches fire. :cheesy2: So, while I make candles, I don't sell them.

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scifichick.. it's not the liability for a faulty candle that you have to worry about.. it's the cost of legal representation to prove it wasn't faulty that is what is so costly. You MUST have insurance.

I sold only to close friends that I felt were responsible and wouldn't sue me if something did happen. And that was it.. no strangers until I had PL insurance.

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I know I was walking on pins and needles for a while because I could not come up with the $300 per year to have insurance. Then I asked my agent about making monthly payments and found out it was an option and I did not hesitate one second and said "sign me up"!!!

I feel so much more at ease now that I have the insurance. As stated previously.....those warning labels don't cover the cost of hiring an attorney in case a suit is ever filed against you or your company.

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Thanks for all the input!

I'll be making some phone calls today. What category of liability insurance should I be inquiring about, or do I just call an agent I trust and tell him that I'm considering selling candles and want a quote on liability insurance?

Happily, this has been a "for fun" craft project and only a few have been given to family members as gifts at Christmas. Am I OK there? I hope the answer is YES.

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Well, I don't make candles and I have product liability insurance for my soaps. And yes, I am sure there are plenty of people selling at craft shows with no insurance but I love my house, and car and boat etc and would rather not lose them for lack of product liability insurance.

So I agree with the need for insurance. I belong to the Handcrafted Soapmakers Guild and I get the membership and the insurance for $500 a year.

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yes you still need it for wickless

What if someone spills some of that wax on grandmas antique china hutch. Their fault? Yes.... but that doesnt mean they cant come after you.

What if the hot wax spills on someone... its like the McDonalds hot coffee incident. We all know coffee is hot.. but that doesnt mean that woman didnt sue them for TONS of money when she spilled it on herself.

What if that wax dipped critter melts in the hot summer months and drips all over someones wall, carpet, valuables...

NONE of that is your control... but you can be sued for any of it.

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Make sure they know that you are making them out of your home if that is the case. Some companies will not sell PL Insurance if it is made out of your home.

That was the big problem I ran into. My insurance would not cover it, so I found another company that would cover it all.

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thanks, hope that helps some of you. This insurance thing is really important and I don't think anybody really knows how important it is or where to go. what website or contact would that be?

Probably need some places that do candle insurance as well.

Edited by soy327
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In rereading this thread, people need to be clear that there are TWO types of liability insurance needed...

One is product liability insurance, which covers problems related to products you manufacture and sell to others. It generally does not cover people slipping and falling in your store.

The other is general business liability insurance which covers other types of liability. Such as your tent blows into another person's car and damages it or someone trips over the cloth on your table and breaks their hip. This is the one that many craft shows require.

Many times, these two types are sold as a package together but not always, so READ what the policy covers to be SURE before purchasing it!! If you don't understand the inclusions & exclusions, take it to an attorney to be sure.

BOTH types are a must! Remember: this isn't about winning a lawsuit, it is about defending yourself against one and protecting your personal assets. It is especially important if your business is set up as a sole-proprietorship (a DBA-type business, which means Me doing business as MyCandleBusiness) or partnership (Me & My Sister DBA TwoSistersCandles) and not an S-Corporation or LLC. DBA businesses do not protect your personal assets and you can be directly sued (ie. your house, car, boat, savings account, etc.). A corporation is a legal entity unto itself, so only the corporation and its holdings can be sued (anything listed as being owned by the corporation - bank accounts, stock, manufacturing materials, buildings, etc.). The personal assets of the corporation's officers are protected. An LLC is something in-between and I am not clear on what it does and does not encompass.

The VERY SMARTEST THING YOU CAN DO is consult with your local attorney about this. Tell him/her what you are doing, how you plan to sell your stuff (ie. craft shows, booth space in othe stores, your own store, over the internet, etc.) and he/she can best advise you how to protect your personal and business assets. They can also advise you about what licenses, etc. you will need to do what in your state/county/city. This differs from place to place, so please get professional advice from someone local!

After receiving the attorney's advice, go to an accountant and have them set up your business books according to the type of business you select.

This is a serious matter which should be discussed with local professionals, so please seek their advice before making any plans. They MAY be able to save you a lot of money, time and aggravation!

FWIW and IMHO, While ChrisR may have spoken stridently, she is correct in her assertions and was trying to make a point about how serious this matter is. Just my 2¢...

Edited by Stella1952
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Stella - that is the best breakdown that talks about the different kinds of insurance and the need for each of them that I have seen. Thank you so much for taking the time to write that all out so others can benefit from the explanation.

I personally did not invest in liability insurance before I made my first candle... or even before I shared my first one with friends as testers. but when I decided I was going to do this seriously you had better believe I forked over the $$$ (and remember if you itemize your taxes to list that expense).

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Well, I don't make candles and I have product liability insurance for my soaps. And yes, I am sure there are plenty of people selling at craft shows with no insurance but I love my house, and car and boat etc and would rather not lose them for lack of product liability insurance.

So I agree with the need for insurance. I belong to the Handcrafted Soapmakers Guild and I get the membership and the insurance for $500 a year.

Yup. I don't make candles either and I would never sell without insurance.

Have you seen how many frivious lawsuits win money for people? I refuse to be one of those victims.

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I now have 2 business in one location -finally out of the house.

One can't be insured because the costs are like medical malpractice cost-ridiculous, and the other is liability on my candles/retail spot and if someone trips coming into the place of business. But get this, if someone trips coming in to do business for the non-insured business, it's not covered, but if they come in for the retail/candle items, it is.

Have you ever heard of anything so stupid. This word is filled with stupid.

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I now have 2 business in one location -finally out of the house.

One can't be insured because the costs are like medical malpractice cost-ridiculous, and the other is liability on my candles/retail spot and if someone trips coming into the place of business. But get this, if someone trips coming in to do business for the non-insured business, it's not covered, but if they come in for the retail/candle items, it is.

Have you ever heard of anything so stupid. This word is filled with stupid.

That's crazy and sad! Just curious, what is the business that cannot be insured and did you get your candle insurance through Indie Beauty Network?

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publishing - advertising. WHen I tried to get liability insurance they asked me if I preferred a $10,000 or $25,000 ded. What a hoot.

That was years ago, couldn't even imagine what it would be now.

:shocked2: wha... wow.

All this talk about insurance has got me shopping around for a better quote. So I contacted my local state farm guy, and he asked for detailed recipes, step by step details of my production... what?!

I've never had to do that before... I was a bit shocked.

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BTW, general business liability insurance does not cover loss from theft, fire, windstorm, flood, hail, meteors, etc. unless that type of coverage is specifically stated. People who pour candles in their home or a shop need separate contents coverage 'cause homeowners will not do much, if anything, for ya in that case.

Personal example: my home burned in the early 90s. Total loss. Glassworking studio in the diningroom. Finished products stored in cabinets, closets & spare bedroom. All set to open a small store & stock it the very next week...

I *thought* my homeowner's policy would cover anything I had in my house, right? Wrong. I needed separate coverage to protect items used for business or commerce in my home. My policy covered only $1,500 of the stock, materials, finished products, machinery, etc. that I had in that dining room. I had over $70,000 worth of stuff in there (who knew!) that was destroyed and not covered... My business liability policy did not cover anything but liability... still makes me nauseous to remember...:undecided

READ your policy CAREFULLY and if you don't understand its exclusions & terms, have a professional (attorney or agent) who does understand go over it with you. Lotsa people get away with not having insurance or enough insurance or the right KIND of insurance every day... and lotsa people DON'T get away with it. As Clint Eastwood said, "Do you feel lucky?" A million dollar umbrella policy would have cost me an extra $40 bucks a month at the time... see how much I saved... :undecided

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I know I was walking on pins and needles for a while because I could not come up with the $300 per year to have insurance. Then I asked my agent about making monthly payments and found out it was an option and I did not hesitate one second and said "sign me up"!!!

Wow...that is an amazing price and payments to boot! Insurance is pretty expensive in my neck of the woods! :tongue2:

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