If you sell anything online, you should probably have insurance in one form or another.
That’s the short answer, but it gets a little more complicated than that, so read on for more details!
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Table of Contents
- Do you really need insurance for your online business?
- What should your insurance cover?
- Product liability insurance.
- Professional liability insurance.
- Where to get business insurance?
- Information about insurance from Artisan Shopping Directory members.
- Summing up.
Do you really need insurance for your online business?
Every online and home-based business should probably have some type of insurance, regardless of what you sell or whether it’s physical or digital products. You might think that nobody will sue you because all that you sell is clipart, but don’t think that it can’t happen.
And the fact is that there are so many types of insurance for businesses, it might not even be a lawsuit that you would need the insurance for. Damage to your work equipment comes to mind, since a lot of homeowner’s policies won’t cover work-related things.
The Hartford, which is a large insurance company in the US, lists ten different types of business insurance that they offer, and a lot of them don’t have anything to do with a customer being damaged by your product (You can see that article here.)
Some of these won’t apply to you, but some might, and you should consider getting a policy that will cover things that could come up if they do apply to you.
The basic types of insurance that most home-based businesses have are probably product liability insurance, and/or professional liability insurance.
The kind of insurance that you need is going to vary depending on what you sell and where you work (home vs. office,) so make sure to investigate the options that apply to you.
Don’t take someone else’s opinion for what you need, this is an individual decision!
What should your insurance cover?
If you buy business insurance, you need to remember that it should cover all of the locations where you sell, so make sure everything is covered.
When I used to rent an office to do tasting appointments when I did wedding cakes, I had to purchase a rider for my insurance that covered the office as a location where I did business.
If you sell at venues like craft fairs or in a physical location, you might need to insure those, too.
Check with your insurance provider to see what they do and don’t cover, don’t assume that just because you have a basic policy it will cover everything!
Product liability insurance.
Product liability insurance covers you for cases where the product that you made damages someone’s property or causes them bodily harm. Depending on what kind of policy you buy, it can be included in general business insurance, but what it’s called will vary from company to company.
Product liability insurance is probably the one that most people will need, especially if you sell anything that could be harmful to people. The things that come to mind immediately are the shops that sell bath and body products, food, and children’s clothing and toys.
There are definitely other businesses that would need product liability, for example pet product sellers, (people get mad when something hurts their pets,) but this kind of insurance is kind of a big deal if you’re selling anything.
When I sold wedding cakes I had a different type of product liability insurance than I do now, because food is its own special classification that can really be dangerous.
With the increase in allergies these days, food businesses and people who sell bath and body, where products can cause reactions, should definitely be running to get coverage.
For children’s products, I can only imagine that it’s a category that would require a lot of very specific coverage, since you’ll be dealing with more regulations around your products, too.
Basically, product liability will protect you if your product physically hurts someone in some way.
Professional liability insurance.
Professional liability insurance is the other type that a lot of businesses should have, but probably don’t. This covers situations where someone says that you or your employees made a mistake that harmed the customer financially or professionally. It’s less about physical damage and more about financial damage.
This might not be something that you’ll need to have, unless you sell services to people, like classes or consulting.
Any time that you could have someone say that you sold them bad advice, you probably need some level of professional liability insurance.
Where to get business insurance?
Once you figure out what insurance you need (or even if you don’t know where to start,) the best place to begin is probably going to be with the company that does your homeowner’s or renter’s insurance. Most companies handle multiple types of insurance policies, and if you have more than one policy with a company, they might be able to give you discounts.
If your homeowner’s insurance company can’t help you, you can do a general Google search or ask other small business owners who they use.
I go through my homeowner’s insurance for my product and professional liability insurance, since that way they have all the information about what’s covered under our existing policies and can add on what I need.
I’ll add that a lot of companies won’t even cover you if you just go the online route…I had one company (that shall remain nameless) turn me down for coverage because my business involves the grey area of things that are edible but aren’t really food.
They either didn’t know how to categorize my business because of that, or they just didn’t want to deal with the food category.
Some business insurance companies won’t touch certain categories because they tend to be more likely to end up in a lawsuit (bath and body and candles come to mind.) so you might have to do some digging before you find a good policy.
Starting with your existing insurance agent will save you some time because they’ll know what’s available and can do the comparisons for you.
Information about insurance from Artisan Shopping Directory members.
I asked the members of the Artisan Shopping Directory where they got their insurance, and they had some good information to keep in mind.
These aren’t meant to be an endorsement of any of these companies, I don’t personally use any of them so you need to do your own research!
Dougie from ShadowMyths says “I get mine here. https://www.actinsurance.com/. One important point that I think that should be made is that insurance for your home studio is generally NOT covered for the products when you are at a show. So, I have regular home insurance and the ACT insurance is for when I’m traveling.”
This is a good point that I mentioned above, too…Make sure that everything that you think is covered is covered.
For example, if you use your car for anything business-related, it needs to be incuded on your business policy.
I used to have my car listed on my business policy because I used it to deliver wedding cakes. If I had been in an accident when I was delivering a cake, they might not have covered the damage to the car since it would have happened while I was using it as a work vehicle.
Erica from Wicked Bride says “I get mine through my agent, the company is MAPFRE – during the pandemic, they added a home business rider to insurance plans, so I have that plus a $1M+ umbrella policy, along with our home and car insurance, all through one plan/payment.”
Bundling your insurance with the same company can be a good policy (pun intended.)
If something happens that damages both your home office space and your personal space, it’s going to be a lot easier if one company is handling it al.
Catherine of Memory Thread Co says “For those of us in the UK, I use Craft Insurance by Ian Wallace https://craftinsurance.co.uk/ It covers product and public liability up to £1M. (Can also get coverage for business property and employer’s liability from them)”
Amanda from Blue Elephant Gift Co also uses Craft Insurance Co, and she says that she really likes it.
If you’re in a country other than the US, make sure that you know what kind of policies there are, and what’s expected.
Different countries will have different regulations about what’s covered and what isn’t, and you need to know what laws there are where you’re located.
Alix from Simply LaMayed, says “I have a business insurance plan with State Farm. It covers liability, inventory, and offsite storage. It also covers my workshop that is in my home. I spoke with a lot of companies, and Allstate was the best option for what I needed.”
That’s a good point…
What your insurance needs are might not be what other people need.
Jenny from Divine Spark Designs uses State Farm Insurance.
If you don’t have an insurance agent that you already work with, going with a larger company can be good because they’ll have agents who can work with you to find the best policy for your needs.
Make sure that you’re covering your own situation and not just buying what other people say they have. Their needs might be totally different from yours.
Kelly from Kimmer and Co is located in Canada, and she says “I use Leibel as my insurance broker, and my insurance is through Intact. I also have separate insurance for selling into the US, since that has additional requirements for coverage.”
Checking to see if you need special insurance for situations like selling internationally, or even for selling in states that aren’t your primary residence, is important!
Marian, owner of Me Plus Thee, gets her insurance from The Hartford. “I have equipment worth over $30,000 should I need to replace, supplies and sometimes items customers supply. We have USAA for our home and they offer business insurance through the Hartford.”
This is an important thing to remember…Regular homeowners insurance won’t necessarily cover business equipment, so make sure that you look into that before assuming you’ll be covered without a business policy.
You might not think about this kind of thing because it’s so easy to set up an online shop, but the legalities of running a business still apply even if you’re only selling things part-time from your home.
Make sure that you know what the licensing requirements are, and if you need insurance, get it.
It’s probably tempting to ignore it at first, but it’s better to bite the bullet and get the right coverage so that you’re protected if you need to be.
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