In my last blog post I shared with you some tips on Pricing and shared a nifty pricing calculator. But, there is more to business than pricing your products.
As crafters and artists who have started businesses selling our creations, we focus all our energy on our creations. Dealing with the business end of things isn’t always a priority may times because we don’t believe that all the aspects of business pertain to us or we don’t know exactly what we need.
In this blog post, we will take a look at one of the most overlooked, misunderstood, and misconceived parts of doing business as an independent crafter/artist – INSURANCE.
We all know that insurance is one of those things that you regret not having only after it’s too late.
For this post I decided to do a bit of research and conducted a quick survey to see how many crafters carried some form of business insurance insurance for their business. Here are the results:
68 Etsy/Artfire members answered the survey – I felt that I should include non-Etsy members as well.
92.6% operate their business from the comfort of their home.
76.5% (or 52) respondents stated that they DO NOT carry business insurance.
These results actually surprised me. Yes, it was a small group who responded but, to discover that a whopping 76.5% do not have business or product insurance made me raise my eyebrow. So I decided to attend a local craft group consisting of members who run full-time or part-time businesses selling their crafts, I learned that of the 50 members who attended the meeting, only 5 carried insurance and they all operated from their homes.
Many felt that their homeowners insurance or renter’s insurance provided sufficient coverage for their home business. When asked if they reviewed their insurance policy prior to starting their business, all admitted to assuming they had coverage. The reality is that most homeowner’s insurance and renter’s insurance will provide only a small level of coverage for equipment but may not protect any inventory and will definitely not provide product insurance. You can purchase a home business rider for your home business but not all insurance companies offer this option. There are no such riders for renter’s insurance.
So let’s talk about insurance. Business Insurance basically protects you and your personal assets in the event a claim is filed against your business. You may be thinking your business isn’t big enough to warrant the added expense of insurance but, the question is, “are you taking a risk?” Insurance is NOT LEGALLY MANDATORY, but it may be something to consider, let’s begin with the types of insurance available and what they cover.
TYPES OF INSURANCE:
Business General Liability Insurance: protects your business assets against natural disasters fire or theft. Coverage usually protects equipment and furniture. Some may include limited liability insurance for products. It protects your business and personal life. It is a yearly insurance policy which means it provides coverage for 12 months.
Errors and Omissions Insurance: We’re all human, and we all make mistakes. E&O insurance covers you when a customer holds your company responsible for mistakes or errors made by your business that were damaging to the client. Usually a good idea to have if you provide a service such as logo creations, marketing materials, etc.
Vendor Liability Insurance: This policy can be purchased for single events, 6 months or 12 months. Again, key word here is events. It protects you and the venue owner from any claims that may be filed against you and the venue relating to a loss related to the event. It does not include coverage for any claims resulting from your product.
Product Insurance: Most people believe that their homeowner’s or renter’s insurance provides coverage for their home business. My advice, check with your insurance agent, you may discover that you may need to purchase what is called a “home business endorsement” for your policy. Most homeowner’s insurance and renter’s insurance only provided coverage for certain equipment and a few storage items, but they do not provide “product liability insurance” which we just learned about above and may not provide coverage in the event a claim is filed against your business.
Now you may be thinking, well I don’t need business or product insurance as the risk of liability is slim to non-existant. I am not a lawyer or an insurance agent so I can’t tell you whether or not you need coverage, I can only help educate you a bit about this whole insurance business; you must make the choice.
To help you get started exploring this topic a bit more, here are some resources for Business Insurance:
RLI Home Business Insurance – (offering home business insurance)
Indie Beauty Network (for bath and beauty manufacturers / New Foodie Insurance)
Specialty Insurance Agency (Craft Show / Vendor Insurance)
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