Is it really necessary to have insurance when selling soap?
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debbism
Well-Known Member
Only if you wish to protect your assets in the event of a lawsuit and you will need insurance if you do a farmers market or craft show.
If someone slipped in my booth or had an allergic reaction to an oil in my products, I would be in real financial trouble if i were to be sued and had no insurance. People sue for all kinds of reason, reasonable or otherwise.
If someone slipped in my booth or had an allergic reaction to an oil in my products, I would be in real financial trouble if i were to be sued and had no insurance. People sue for all kinds of reason, reasonable or otherwise.
Yes.
judymoody
Well-Known Member
I got mine from RLI for less than $150/year. I only do word of mouth sales. Still, worth every penny.
debbism
Well-Known Member
That sounds like an amazing rate - would have to check into that to see what my current coverages would cost me with them. My interest is peaked!
Is this it? http://www.rlicorp.com
Is this it? http://www.rlicorp.com
Cuckoo Bananas
Well-Known Member
I think it depends where you live (in terms of country and regulations).
Here is Australia you don't need product insurance to sell your soap, you do need public indemnity insurance though to have a stall at a market. When I looked into it and what that covers exactly it didn't cover any damage caused from your soap per say but just that if someone fell over and broke their ankle in your stall area then it covers that kind of thing.
I looked into getting product liability insurance but it was too expensive. I think you need to be realistic about how many sales you make and where you make them and the likely hood of what could happen. I personally think a hobby soap business doesn't warrant insurance and how people afford it and can still make a profit from soap I'll never know. I think if your worried about it you should look into getting some sort of indemnity thing written up and display that at your point of sale ie about how you take no responsibility blah blah blah and how soap is intended to be used in such a such a way and take care not to get in eyes or slip in the shower and maybe even offer a test bowl with water there so they can check if they like it and see it won't burn their skin or whatever is they are sensitive... and let them know you keep the price of your soaps affordable by not having insurance ...
Here is Australia you don't need product insurance to sell your soap, you do need public indemnity insurance though to have a stall at a market. When I looked into it and what that covers exactly it didn't cover any damage caused from your soap per say but just that if someone fell over and broke their ankle in your stall area then it covers that kind of thing.
I looked into getting product liability insurance but it was too expensive. I think you need to be realistic about how many sales you make and where you make them and the likely hood of what could happen. I personally think a hobby soap business doesn't warrant insurance and how people afford it and can still make a profit from soap I'll never know. I think if your worried about it you should look into getting some sort of indemnity thing written up and display that at your point of sale ie about how you take no responsibility blah blah blah and how soap is intended to be used in such a such a way and take care not to get in eyes or slip in the shower and maybe even offer a test bowl with water there so they can check if they like it and see it won't burn their skin or whatever is they are sensitive... and let them know you keep the price of your soaps affordable by not having insurance ...
Cuckoo Bananas said:
I don't sell but it's not a good idea to be without insurance. Even if I didn't have insurance, I sure wouldn't let customers know I didn't have it. There are many honest people but there are always a few who will use dishonest means to get something for nothing. I wouldn't want to lose my house and everything else I have just because I thought insurance was too expensive. There are risks and then there is foolhardiness. No matter what business you are in, it's just commen sense to have insurance to protect yourself.
Calculate how much the insurance would cost on a daily basis. $150 a year is 41 cents a day. How many batches do you make in a day? How many bars is in one batch? How much product will you have to sell to pay for the insurance? If you only make one batch a week and get 7 bars out of it, 41 cents is only going to add 6 cents per bar. Charge a litte more for your products if you think insurance costs too much. The people will pay what you ask if you make quality products.
BTW, SMF highly recommends all sellers protect themselves and have insurance.
zeoplum
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Can someone tell me, what kind of due diligence would insurance require of you if someone did make a claim? I heard at a conference that you would have to show that your batch was tested by a lab. And there are strict rules about documenting your ingredients such as date purchased (and some other stuff I can't remember). And the labeling guidelines have to be followed to a tee. Otherwise, they won't pay the claim.
I don't see how it is cost effective to have each batch tested when one batch would yield only 12 or 24 bars. Seems like I remember it would cost about $30 for each test. This was about 3 years ago so I might be fuzzy on the details.
I just remember getting the impression that many soap makers Are paying to be covered and probably don't even realize what all is involved in being insured.
Can someone respond who knows more and can explain?
I don't see how it is cost effective to have each batch tested when one batch would yield only 12 or 24 bars. Seems like I remember it would cost about $30 for each test. This was about 3 years ago so I might be fuzzy on the details.
I just remember getting the impression that many soap makers Are paying to be covered and probably don't even realize what all is involved in being insured.
Can someone respond who knows more and can explain?
You don't have to have soap tested in a lab. It is recommended you have lotions, creams and anything else which requires a preservative to be tested for the preservative's efficacy. You only have to have an ounce or so (I'm not sure of the amount but it's a small amount) tested for your recipe. Once it's tested, you're good to go. The only time you'd have to have it tested again is if you alter the percentages in your recipe. Example: if you add more water or add less water.
I'm sorry I can't help with your other questions.
I'm sorry I can't help with your other questions.
thanks for posting that link. I am just starting to sell to family and friends and am looking into insurance. I would think all those questions that were asked would need to be answered by the insurance agent. He could tell you exactly what you would need to do in order to cover a claim if there should be one.
Its a bad idea to sell product and not have liability insurance..."if something can happen...it will"
Its a bad idea to sell product and not have liability insurance..."if something can happen...it will"
Cuckoo Bananas
Well-Known Member
Letting them know is kind of the point with an advertised indemnity, if they still choose to buy your soap they buy it knowing it is their own risk. It's like all those do not enter signs, people can still enter, they just can't sue because they do it knowing there may be danger.
If your clever and word it in an amusing way about how soap is intended for use it will take away the abruptness of saying your on your own if anything goes wrong. I wouldn't hesitate about trying or buying a handmade soap from someone if I could pick it up, look at it, sniff it and even test it out in a small bowl of water (I've seen others have test bowls).
If your clever and word it in an amusing way about how soap is intended for use it will take away the abruptness of saying your on your own if anything goes wrong. I wouldn't hesitate about trying or buying a handmade soap from someone if I could pick it up, look at it, sniff it and even test it out in a small bowl of water (I've seen others have test bowls).
Hazel said:
Not sure about other countries but in the US placing "beware" signs is a really bad idea and could be spun in a court that you knew there was risk and didnt do enough to prevent it....ie: same thing as the "beware of dog" sign, it admits that you know your dog is a danger and still put people at risk. So it actually causes you more problems in court by admitting liability.
A lawyer will spin it saying they you are the expert and expecting his client to understand the dangers your product is unreasonable. The expectation idea wouldnt work because who would "expect" a soap product to harm them??? Expectation works in cases where there is a general idea that what you are doing could be harmful...ex: jumping out of a plane, or playing on a basketball league, but not bathing!
A lawyer will spin it saying they you are the expert and expecting his client to understand the dangers your product is unreasonable. The expectation idea wouldnt work because who would "expect" a soap product to harm them??? Expectation works in cases where there is a general idea that what you are doing could be harmful...ex: jumping out of a plane, or playing on a basketball league, but not bathing!
dirrdee - good reply.
I remember hearing too many lawsuits of people suing companies because they were injured by their products. Anyone remember the incident of the woman who went through a McD's drive-thru, bought coffee, spilt it on herself and got a burn? She sued them because the coffee was too hot. I was amazed. I rarely bought coffee at drive-thrus but even I knew the coffee is always really hot when you first get it. Coffee is supposed to be hot.
Then there was another lawsuit where someone sued a fast food company and said their food made him fat. What? They held a gun to your head and forced you to eat it every day? Then wouldn't let you exercise?
A woman walked into a store which had big orange cones with caution strips surrounding a damaged area in the floor. This damaged area was roped off yet the woman managed to walk into the damaged area and "injure" herself. Another lawsuit.
My mother was having a yard sale and had a bike she was selling. A woman was looking at it and insisted she should be able to try it out. My mother didn't want her to but the woman fussed and said she wouldn't consider buying it without testing it. She got on the bike, rode a few feet and then fell off. Of course, she screamed and said she had injured her leg. The other woman she was with helped her to the car (she was moaning and limping all the way) and they drove away. She really made a big production about being injured and making sure everyone noticed her. Everyone at the yard sale was watching her. I was upset, my mom was upset and we really expected this woman was going to sue for injuries, mental distress, etc. My mom was very stressed and worried about it. Fortunately, we never heard from the woman again. I don't know why this woman didn't sue after she made such a fuss and making sure everyone noticed her. The whole incident seemed very contrived and suspicious. One of my sisters said the woman probably pulled something like this everywhere she went and then either found a better opportunity or couldn't remember where my mom lived.
Everyone's a victim and no one wants to take responsibility for their actions. Sadly, common sense is an oxymoron. An excellent adage - it's better to be safe than sorry. I don't know how it is in other countries but if you live in the US, I highly recommend you get insurance. If you feel you can't afford insurance, then you shouldn't be selling in my opinion. But that's a risk you have to decide you want to take.
I remember hearing too many lawsuits of people suing companies because they were injured by their products. Anyone remember the incident of the woman who went through a McD's drive-thru, bought coffee, spilt it on herself and got a burn? She sued them because the coffee was too hot. I was amazed. I rarely bought coffee at drive-thrus but even I knew the coffee is always really hot when you first get it. Coffee is supposed to be hot.
Then there was another lawsuit where someone sued a fast food company and said their food made him fat. What? They held a gun to your head and forced you to eat it every day? Then wouldn't let you exercise?
A woman walked into a store which had big orange cones with caution strips surrounding a damaged area in the floor. This damaged area was roped off yet the woman managed to walk into the damaged area and "injure" herself. Another lawsuit.
My mother was having a yard sale and had a bike she was selling. A woman was looking at it and insisted she should be able to try it out. My mother didn't want her to but the woman fussed and said she wouldn't consider buying it without testing it. She got on the bike, rode a few feet and then fell off. Of course, she screamed and said she had injured her leg. The other woman she was with helped her to the car (she was moaning and limping all the way) and they drove away. She really made a big production about being injured and making sure everyone noticed her. Everyone at the yard sale was watching her. I was upset, my mom was upset and we really expected this woman was going to sue for injuries, mental distress, etc. My mom was very stressed and worried about it. Fortunately, we never heard from the woman again. I don't know why this woman didn't sue after she made such a fuss and making sure everyone noticed her. The whole incident seemed very contrived and suspicious. One of my sisters said the woman probably pulled something like this everywhere she went and then either found a better opportunity or couldn't remember where my mom lived.
Everyone's a victim and no one wants to take responsibility for their actions. Sadly, common sense is an oxymoron. An excellent adage - it's better to be safe than sorry. I don't know how it is in other countries but if you live in the US, I highly recommend you get insurance. If you feel you can't afford insurance, then you shouldn't be selling in my opinion. But that's a risk you have to decide you want to take.
judymoody
Well-Known Member
I am mostly a hobbyist but I give soap to teachers and friends, I provide it for fundraisers and I sell the occasional bar if somebody asks.
My label reads: "For external use only. Discontinue use if irritation occurs. Avoid contact with eyes."
I include all ingredients including every single EO.
That should cover most eventualities. If the consumer eats it, it's on them. If they're allergic and keep on using it, it's on them. I make sure my soap is not lye heavy.
To me, the liability involved in selling water-based products is not worth it. I make lotions and hair products for home use but everything else I produce for the general public, be it gift or sale or donation, is anhydrous.
My label reads: "For external use only. Discontinue use if irritation occurs. Avoid contact with eyes."
I include all ingredients including every single EO.
That should cover most eventualities. If the consumer eats it, it's on them. If they're allergic and keep on using it, it's on them. I make sure my soap is not lye heavy.
To me, the liability involved in selling water-based products is not worth it. I make lotions and hair products for home use but everything else I produce for the general public, be it gift or sale or donation, is anhydrous.
brewsie
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has anyone taken it as far as registering your soap co. as an LLC? essentially this separates your business assets from your personal assets, so if you do get in trouble, they can't go after your personal assets (your house, for example). a lawyer friend briefly explained this to me and suggested i look into it. i assume this is supplemental to having insurance.
VanessaP
Well-Known Member
Limited Liability Corporation is just another business structure. Most home-based one person businesses will run as a Sole Proprietorship but if more than the one person, it needs to be under another structure. LLCs should have insurance as well.
brewsie said:
I'd say if you can set up your business as a LLC, then do it as added protection.
I know I sound cynical but I've had experiences in my life which make me leery in some situations to trust in the goodness of people's motivations. Not all people, it's a very small percentage but I prefer to be cautious.
It's up to the individual whether to have insurance or not. I'm just expressing my opinion about this topic.
Bubbles Galore
Well-Known Member
zeoplum said:
I agree. Just purchasing PL Insurance is not enough. One needs to ask the Ins.Co. what records one should be keeping.
Cuckoo Bananas
Well-Known Member
I'm not saying people shouldn't get insurance - just don't over kill it for a 'hobby' business if your only selling to family and friends and the odd person.
At the end of the day a good lawyer can spin stuff whatever way they want, and so can a good insurance company to get out of covering you as well. With regards to people suing over anything and the coffee incident at maccas and the fat guy - I think that is more complicated and involves a clever lawyer seeing a cash cow opportunity and having a field day with a big corporation who has the money to bleed. Also from memory wasn't that coffee machine set too high or something so instead of hot coffee it was scalding and that chic got massive 3rd degree burns??? That's very different to a small time soaper who is probably already obsessive on testing their soap and if your soap is burning you than please don't sell it (or even use it yourself).
There are costs involved in LLC as well so it may not be cheaper than insurance.
It really is country/location specific though as to the costs and regulations.
There is a lot of fear out there about this stuff - some is warranted, some just needs to be balanced out with common sense.
You should do what ever is going to help you sleep better at night - no point staying up feeling afraid that someone might sue you, if your that worried get insured - if your not - you don't *have* to have it.
At the end of the day a good lawyer can spin stuff whatever way they want, and so can a good insurance company to get out of covering you as well. With regards to people suing over anything and the coffee incident at maccas and the fat guy - I think that is more complicated and involves a clever lawyer seeing a cash cow opportunity and having a field day with a big corporation who has the money to bleed. Also from memory wasn't that coffee machine set too high or something so instead of hot coffee it was scalding and that chic got massive 3rd degree burns??? That's very different to a small time soaper who is probably already obsessive on testing their soap and if your soap is burning you than please don't sell it (or even use it yourself).
There are costs involved in LLC as well so it may not be cheaper than insurance.
It really is country/location specific though as to the costs and regulations.
There is a lot of fear out there about this stuff - some is warranted, some just needs to be balanced out with common sense.
You should do what ever is going to help you sleep better at night - no point staying up feeling afraid that someone might sue you, if your that worried get insured - if your not - you don't *have* to have it.
