# Insurance



## panther (Oct 8, 2013)

When is it necessary to purchase insurance for your soap business?  I'm just starting out and don't have the money at this time. Any advise would be appreciated. 


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## PinkCupcake (Oct 8, 2013)

Insurance is a lot cheaper than a lawsuit! In my opinion, if you're selling soap, you need insurance.


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## savonierre (Oct 8, 2013)

before you sell your first bar is a good time to get it. Can you afford to lose your home etc because of a lawsuit?


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## dagmar88 (Oct 9, 2013)

panther said:


> When is it necessary to purchase insurance for your soap business?  I'm just starting out and don't have the money at this time. Any advise would be appreciated.
> 
> 
> Sent from my iPhone using Soap Making



Please just put it on hold for the time being. It might seem excessive, but I can not emphasize the importance of being insured before you even sell your first bar of soap enough.
Would you feel comfortable driving an uninsured car?


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## panther (Oct 9, 2013)

Who do you use for the insurance?


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## dagmar88 (Oct 9, 2013)

Here's some more info.

http://www.soapqueen.com/business/business-insurance-for-the-handcrafted-industry/


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## pamielynn (Oct 9, 2013)

RLI has good rates - in my area, anyway.

ETA: it's not just for product liability either. Once you've amassed a small warehouse of ingredients, you should have insurance that covers it - just in case anything should happen. If your homeowner's decides that your 400 bottles of FO isn't just for a hobby, they probably won't cover it if you have a flood or fire.


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## shunt2011 (Oct 9, 2013)

I would not sell anyting without insurance.  I went wit the Handcrafted Soapmakers Guild.  I did check with RLI and they were somewhat cheaper but I liked some of the benefits that came with the Soapmakers Guild.


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## 100%Natural (Oct 10, 2013)

If you can't afford the insurance, you can't afford to be in business yet.  I would never take a risk that put my family's financial well being in jeopardy.  Even if you get insurance down the road after you've been selling for a while and a customer decides to sue you and they bought that bar before you had the insurance in place, you're in a mess.  It's just not worth the risk.


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## Jencat (Oct 10, 2013)

Tagging onto the end here.  Do you need insurance if you are still in the R&D phase and want to give samples to friends and family for market research purposes?  I'm paranoid that someone might have a reaction to something.


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## Lindy (Oct 10, 2013)

I agree with everyone here, you _*need*_ insurance.

One of the things I found out when I first started and checked with my home insurance to see if they would cover this is that if you do not have commercial insurance (this is considered a high risk liability business) then you will void your home insurance should you ever have a claim such as a fire whether or not your ingredients cause the problem.  Just not worth the risk.


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## panther (Oct 10, 2013)

Jencat - I too am interested if insurance is needed for R&D. 


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## Second Impression (Oct 10, 2013)

What would you do if someone had a bad reaction to something you made? What would you do if they sued you? Your answers to those questions will guide you towards what kind of insurance you need, if any. 

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## Lindy (Oct 10, 2013)

Panther if you are not selling then you don't need insurance as long as your friends and family aren't the type to sue you.  I didn't get insurance until I was ready to sell, then I had it before my first venture out...


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## PinkCupcake (Oct 11, 2013)

Lindy, my friends and family would never sue me. But I worry about who they might give my soap to. Those people might be delighted to sue me!


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## shunt2011 (Oct 11, 2013)

I didn't get insurance until I was ready to sell.  My family and friends knew they were guinea pigs and I just told them if they have a reaction stop using it.  Fortunately after 3 years it's never been a problem.


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## SugarandOats (Oct 16, 2013)

Than what's the point of an llc?

sugar & oats


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## Jencat (Oct 16, 2013)

From what I understand, an LLC protects your personal assets by setting up a separate business entity.  You would still need insurance to protect your business assets.  I don't know what would happen if someone sued an LLC and was awarded more money than the business had.  I assume you would have to make up the difference somehow.  Better to have insurance and be covered just in case.


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## cmzaha (Oct 16, 2013)

Believe me a corporation will not keep you safe from everything. Problem today is the fact even if you set up a corportion much of what you do, insurance, bank loans etc will have to be personal guarantee, so I do not find them much help. In fact I hate corporations with a passion. Get your insurance for at least a million and move on with your business. My insurance is purchased from The Soap Guild. They are great to deal with and no limits how much I make. From what I read about RLI their less expensive insurance is geared to crafters and you are limited on yearly sales.


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## pamielynn (Oct 17, 2013)

Yes - I don't get the small soaper becoming an LLC either. If you're getting sued, they'll look at your corporation and see that you are the ceo, your husband is cfo, your best friends are your "board". Won't take long to realize that they are still going to sue YOU. 

I don't think small soapers get sued with any regularity, but for $200-300 a year for insurance, it's totally worth it. And again, you need it to cover your "warehouse" and inventory.


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## Moody Glenn (Oct 17, 2013)

Hello everyone! I agree that everyone that sells should have insurance. Having a LLC does protect your personal assets but insurance also helps protect your business assets and strengthens that you are serious in having a LLC. If someone wants to sue you they will have to prove that you deliberately planned or deliberately produced a product to specifically harm them. That proof is for them to show to a judge and jury - not a simple thing to do and honorable lawyers discourage this type of knee-jerk reaction. If someone sued you they would have to prove you knew that the product was dangerous to them and others. Let's say a particular fragrance oil caused them to have a serious allergic reaction that caused them to go to the ER. Did you know that FO would cause this reaction to this person? No - how could you? That is your solid defense. And my LLC lawyer explained to me that your LLC business could then legitimately counter-sue that individual. That scares the daylights out of many potential sue-happy individuals.

Always make a skin safe product with recorded information. Create a safe recipe, measure correctly, test several times, label correctly, add a disclaimer about possible allergic reactions, package safely and then RELAX- you made a good product to the best of your ability. Always keep a log on each batch. What was made, how much, what date and time and what supplies and suppliers were used. If you feel a product is "not right" don't sell it and trash it. Determine what went wrong in making it and record that info - don't trust your memory. These logs can show that you are careful in making your products, your not out to harm people and goes a long way in protecting you and your business. As for the person trying to sue - he or she will have a tough time proving you are out to deliberately harm him or her.


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## SugarandOats (Oct 17, 2013)

Very well said glenn! So what or where do u recommend getting this kind of insurance at? So I can literally cover my rear end 

sugar & oats


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## FGOriold (Oct 17, 2013)

Actually it is my understanding that an LLC will not protect you or your personal assets if you, as the owner of a company, are found negligent.  An LLC is typically to protect a business from money owed to others such as creditors.  Liability insurance is essential.

Additional info:
If you form an LLC, you will remain personally liable for any  wrongdoing you commit during the course of your LLC business. For  example, LLC owners can be held personally liable if they: 

personally and directly injure someone during the course of business due to their negligence
fail to deposit taxes withheld from employees' wages
intentionally do something fraudulent, illegal, or reckless during  the course of business that causes harm to the company or to someone  else, or
treat the LLC as an extension of their personal affairs, rather than as a separate legal entity.
 Thus, forming an LLC will not protect you against personal liability  for your own negligence, malpractice, or other personal wrongdoing that  you commit related to your business. If both you and your LLC are found  liable for an act you commit, then the LLC’s assets and your personal  assets could be taken by creditors to satisfy the judgment. This is why  LLCs and their owners should always have liability insurance.


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## SugarandOats (Oct 17, 2013)

Thank you everybody! The things they don't teach you in school! Thx again!

sugar & oats


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## Lindy (Oct 17, 2013)

Actually to be able to sue successfully all they have to show is negligence.  So if your recipe isn't safe (no preservatives for instance) then you have been negligent and they can sue you successfully.


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## Nevada (Oct 17, 2013)

Will anybody EVER say that you don't need insurance? No of course not.
It's easy to sue someone, and get a judgement.
But collecting a judgement is the hard part.


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## SugarandOats (Oct 17, 2013)

So putting chemicals in your things is safer?

sugar & oats


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## dagmar88 (Oct 17, 2013)

SugarandOats said:


> So putting chemicals in your things is safer?
> 
> sugar & oats



Using preservatives appropriately is, yes.


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## Jencat (Oct 17, 2013)

SugarandOats said:


> So putting chemicals in your things is safer?
> 
> sugar & oats



From what I've read, if you are making a product that can spoil and thus cause injury to people you are much better off using a preservative.  I believe in using natural products as much as possible, but if I starting making products that contain water (like lotions) or products where water is likely to be introduced (like bath scrubs) I'll use a preservative.  So far, I'm just doing soap, bath salts and bath bombs.


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## shunt2011 (Oct 17, 2013)

Using preservatives in creams, lotions etc is important unless you want to risk a customer getting a horrible bacterial or staph infection from using a bacterial moldy infested product product.  Just because you can't see or smell nasties doesn't mean they are not there.   Why take the risk is my personal belief.


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## Lindy (Oct 17, 2013)

In my opinion I feel it is my responsibility to make products that are safe for my clients to use.  I don't believe in jumping on whatever the fashionable bandwagon is for this week and believe in common sense.  Common sense tells me that there is a balance to be found between science and nature, by finding that balance we protect ourselves, our loved ones and our clients.  Everything is made up of chemicals so it's not a bad word, nor is it one that is nasty.  If you eat processed foods you're eating chemicals.  If you buy bread, you're eating chemicals, if you use margarine, you are using chemicals.  Be smart about it and know that not all chemicals are bad.


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## jcatblum (Oct 18, 2013)

I just wanted to add that every state the law is different. Less than $100 and anyone can file a small claims case (I think $6000 or less in damages here is small claims). Most cases is one persons word against the other. Outcome depends on the judges mood IMO.


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## SpiralTouch (Oct 20, 2013)

pamielynn said:


> Yes - I don't get the small soaper becoming an LLC either. If you're getting sued, they'll look at your corporation and see that you are the ceo, your husband is cfo, your best friends are your "board". Won't take long to realize that they are still going to sue YOU.
> 
> I don't think small soapers get sued with any regularity, but for $200-300 a year for insurance, it's totally worth it. And again, you need it to cover your "warehouse" and inventory.



Mind sharing who you went with to get insurance that affordable?


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## angelsthreeinc (Oct 30, 2013)

As a newbie I am so grateful for the information that was shared by more seasoned soapers! Thanks  a word to the wise should be sufficient!


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