Do you need insurance if you're making candles?
Getting insured for your candle or bath and body products probably isn’t the first thing on your mind as you consider launching your hobby into a business.
However, there are important considerations and responsibilities for small business owners in this space.
It can be a confusing premise or it’s simply a cost you don’t want to be burdened with.
To debunk some of the myths of insurance and to learn more about this area, I’m having a chat with Rebecca Innes of Auzi Insurance.
Bec has been in the industry for 20 years, working in a variety of roles for insurers, underwriters and brokers.
She has a stellar reputation in the insurance industry and has been working with small business owners who make candles, and bath and body products, for many years.
You’re in good hands with Bec, as she’s also the holder of a Diploma in Financial Services (Insurance Broking) and a Certificate IV in OHS, so she knows her stuff!
Let’s dive in.
What is the purpose of Public and Products Liability Insurance for small businesses in the candle/soap/bath and body making world just like me?
Public and Products Liability Insurance has the same benefits for all small business and that is to protect your livelihood if someone were to try and sue you for property damage or personal injury.
If someone purchases a candle and that candles explodes in their home, sets fire to their carpet and causes damage they are more than likely going to try and seek compensation from you as the candle maker.
Any claim being brought against you can prove costly to you and your business as legal fees and representation add up quickly and this is what your Insurance will assist with.
It really is just peace of mind that you have protection in place when purchasing Insurance.
Does a small business like mine really need insurance?
Public and Products Liability and other forms of business insurance are not compulsory.
At the end of the day, it is the business owners decision as to whether they outlay the cost to protect themselves.
But I say absolutely!
Most small businesses struggle to get through the first few years of trading as it is and to then throw a potential claim in the mix could stop you and your dream before it even takes off!
Our recommendation is to always consider purchasing insurance. As I mentioned before, legal fees do add up quickly when you are defending a claim and this is where your Insurance policy comes into play.
If you don’t have Insurance you could lose everything if someone was to successfully sue you.
Ok, I probably need to get this sorted! When arranging a quote what do you need to tell your insurer?
Everything, well almost everything.
When you are talking about your business make sure firstly the Insurer understands what you are doing and that if you do purchase insurance that your schedule of cover reflects exactly what you do. There is no point paying for a policy that classes you as a handyman if you are making candles, you are literally throwing your money away.
Let's use soap making as an example.
Firstly, your home/ contents insurer or landlord may need to be aware of you making soaps on the premises.
Regardless of whether it is down the back shed, it is still on the property and they need to know as this could affect their decision to pay a claim if they were not aware, even if a claim in unrelated to the business.
Always check with local councils if any additional permits are needed as I know some areas have very specific rules about business being run from home.
Your car Insurer may also need to know if you are using the vehicle for any form of business like picking up supplies for your soap making or making a delivery.
Then they need to know what you do within the business.
So what you manufacture, what you retail and what you import and everything else you do in the course of your business.
If you make candles and pour them yourself but then engage a third party to add the labels and packing then we need to know about this.
They also need to know your full product listing. So, if you are a candle maker who sells body sprays, oils, melts, warmers and then sell some clothing and bags on the side then this is what you should tell your insurer.
If you import, re-label, re-package or alter a product in anyway this can deem you to be the manufacturer of that product for Insurance purposes, so when speaking to your Insurer tell them everything you do.
If they don’t understand what you do then maybe it is time to switch providers!
HOT TIP: Send them your social links for Facebook or Instagram if you have a business or your website so they can see everything you make and sell.
You also need to tell them when your risk changes at any time.
Say you start making candles so you buy a candle maker policy.
Then 6 months later you start making soaps, balms, creams and jewellery, the risk has now completely changed and you risk voiding your insurance if this information is not disclosed.
Also, if you start exporting to the USA or Canada then you need to confirm this with your Insurer immediately as this is generally not an automatic cover under a policy.
Your Liability insurer needs to know about you and your history and will always ask a handful of questions in any application that will apply to you.
This information is all important on the decision the Insurer makes to insure you or not.
You have a Duty of Disclosure when it comes to Insurance and if the duty is not fulfilled you can potentially have a claim declined or your policy cancelled.
Familiarise yourself with sites like ACCC, TGA, NICNAS, business.gov, labelling laws, ASIC, Fair Trading and utilise social media and join groups with like minded businesses to find out information, tips and tricks.
Please also take the time to read your PDS and policy wording.
This can be overwhelming at first but taking time to understand what you are paying for will benefit you in the long run, and as Insurance professionals we are here to help understand some of that jargon.
Is there a way to make your policy cheaper?
Every Insurer uses certain tools to calculate premiums for Insurance.
It is all based on statistics, industry, economy, more numbers and claims and a heap more other interesting data, and a few more numbers.
So there is a science behind it!
But to get your price down you need to tell your insurer exactly what you do in full.
Be upfront with your current Insurer if you find a better price as a lot of business will always want you to stay so they may offer you a discount.
Loyalty can also get you better pricing.
The longer you stay with one Insurer the better bargaining power you have for discounts if someone else does sneak in with a better price.
We have worked hard to get our prices the way they are by understanding exactly what you guys do and knowing the potential exposures.
That is why we are priced the best because we know exactly what you do from start to finish.
You’ve been working in insurance for a while. You must hear a LOT of myths and misconceptions about insurance. What’s the most common?
I don’t need insurance as it will never happen to me!
Being in the industry for as long I have and being a mum of two young ones has made me so much more aware of potential risks in life in general.
I have seen businesses fold due to claims being brought against them for not having any cover at all or not having the right cover.
I have also seen losses of a catastrophic nature from causes that you just wouldn’t think about or even think would happen.
Is it worth losing your home, your car and every last cent you have because you didn’t want to outlay the funds for your Insurance each year when something does go wrong?
If I already have insurance, how can I check that it’s covering me for what I need?
Never make an assumption and don’t be afraid to speak to someone.
If you aren’t sure that you have the right cover have a talk to your insurance company and make sure they are aware of everything you do.
Always ask the advice of a professional whether it be someone like AUZI who is an Insurance Broker who specifically deal in your industry and know the finer details of what you do.
Thanks so much to Bec from Auzi Insurance for helping to clear up some misinformation and to share her wealth of knowledge! There’s so much to running a small business and insurance is definitely high on the priority list.
What were you surprised to learn in this post? Have more questions? Drop them in the comments!