# Business Owner Policy - Insurance



## SideDoorSoaps (Aug 4, 2010)

So we are having the HARDEST time getting insurance other than just product/equipment liability. We checked out RLI and the Guild, however my husband just doesn't want liability. He thinks for a business where we are manufacturing (our insurance company's terms) in our home, there should be some kind of property protection in case of fire or other chemical disaster.

RLI and Soapmaker's Guild does not have anything like this. After looking online, we found that it's called a Business Owner Policy or BOP for short. The problem we are running into is that our homeowner's policy makes no endorsement for home businesses AND the insurance company says if they find out we are making soap in our home, they can drop us. The underwriter said NO WAY to our soapmaking business in the house. 

Now, the broker said we could make it for ourselves, just not for profit or if we do for profit, and something happens, if they come out to inspect and they see 1,000 bars of soap, they would be wary...

So, we are having a hard time finding a policy that would protect our structure from damage while manufacturing products in our home. All the stuff and equipment is covered, just not if the house burned down. Has anyone else considered this when getting insurance or just assuming and hoping that nothing will happen and getting the liability?


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## Bukawww (Aug 4, 2010)

It depends what you want your insurance to do for you.

Insurance is for worst case circumstances.  My worst case scenario is that one of my bars of soap kills someone - so I need insurance to pay them so I am not homeless HEAVEN FORBID that happen.

What are the possibilities of damage to your home making soap?  I can't think of anything...unless you are ridiculously careless with your lye and/or the simmer flame on your stove for melting the oils.  The thing is, your homeowners ins says no - mine doesn't care so maybe you should look into a different company.

And I am CERTAIN that RLI offers BOP...I was reading it last night.


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## SideDoorSoaps (Aug 4, 2010)

We want our insurance to take care of the worst case scenario of our house burning down for whatever reason during the soap making process, not only for liability of making sure another person is damaged or injured. Whatever the case, business insurance takes care of a rented property's structure, but not my own home?

We are in the process of looking for another insurance company other than the one we have. Our company believes anything chemical is too much of a risk and anything flammable. While RLI has a type of BOP, RLI does not have enough of a comprehensive coverage to include property damage other than the supplies. Also, according to the person I talked to at RLI, he said that unless my stove was solely my business's and not my home's then that wouldn't be covered either.

In any case, we will be making soap and other cosmetics, so I want to protect my home no matter what.  I don't intend to be careless, but I'm looking at it as if I'm having full coverage for my car, why not my home. Even if my house burned down for not anything business related, and the insurance finds out somehow, they can determine that since we are running a business that they don't like, they can forgo claim payment and drop us.

The insurance offered is only liability for other people and just the business stuff. Does anyone else have concerns about their house?


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## Best Natural Soap (Aug 4, 2010)

We've had Allstate for 14 years. There's a small amount of coverage for home business that's part of our basic coverage. But, it's VERY small. I can't imagine a home burning down making soap and cosmetics. It's not any more dangerous than deep frying something- in fact, less so, because the oils never get as hot as that. Lye is caustic, but also used as common drain cleaner. It doesn't flame up when making soap. 

I'm very comfortable with my little bitty Allstate rider. I think it covers $500 in lost product, and $1000 in personal property damage. 

I know Allstate can be expensive to start, but we have our cars on there, as well as the house, and have never had a different carrier. Our rates have gone down with time.


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## SideDoorSoaps (Aug 5, 2010)

At this time, it certainly looks like we are moving our homeowner's policy somewhere else since our insurance says any oil whatsoever meeting a heat source and lye being a chemical is too much of a risk for them to consider. I didn't think it was a big thing either after talking to a bunch of people and reading what they had to say about the whole process.

I'm sure we'll find something especially since now our insurance has threatened to drop us. I'm very unhappy with them about this whole situation because we've been with them for quite awhile. Even our agent didn't know how to proceed with it other than just going ahead and take the risk.

I'm waiting to hear back from All State and two brokers. Here's hoping! Thanks for that tip. I was just told by another company that they don't cover anything we make and label ourselves. The product has to be something premade. What is that all about!!


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## cwarren (Aug 5, 2010)

I think I would get another Homeowners ... are you even covered if you have a fire unrelated to soap making ???  and what if you have a fire unrelated to soapmaking and special policy wont pay cause you werent making soap.. and your homeowners now wont pay cause you have soap in your house.. best to find 1 thats on the same page as you.. ((( I had State Farm for 6 years and never knew they excluded fire coverage because there was an old woodburner pipe coming out my roof.. My mortage lender caught it... ))))     do you have a garage you can make soap in ? then store them in the house ?


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## SideDoorSoaps (Aug 5, 2010)

Our agency told us if there were a fire even unrelated to the soap, if they see an amount of soap that would be deemed more than personal use (I'm guessing 100 bars or more) that they could deny the claim because they already told us they were not going to cover us since we were making soap, unless, again only for personal use. However, if they see we have a registered business or find out we are insured by another company and a fire breaks out, they will drop us. Could that be fraud also? oh no...

I did think about if we had an outbuilding, would that be okay, and nope, they said it was part of our property that is being insured by our homeowner's policy. AND, a lady told us also that having a separate policy for the business covering the house and a separate homeowner's policy would be illegal because it would be double coverage, we would need to find a way to include it as an endorsement package on our homeowners. It's getting a bit tedious now with all this info! arrrrggggg...


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## Bukawww (Aug 5, 2010)

I'm really sorry you are having such difficulty with all of this.  

Why do you need business insurance if you are manufacturing in your home?  It seems to me (And this is what I do) that you need first a homeowner's policy that doesn't mind that you make soap as a business and some awesome product liability insurance.  My homeowner's covers my 'business' because it is also things I use in my home - and then I have liability ins in case someone goes Mcd coffee on me   

Other than that, I would save a good bit of money up to cover yourselves with CASH in case something happens...but I do NOT carry full insurance on my vehicle as I have savings for that (I have enough to cover what I cannot pay in cash).  Insurance is only supposed to be considered in case of catastrophic events...everything else should be paid/covered in cash/savings anyway IMO.

Just an option in case you can't find anything - I have heard of certain states/counties not even allowing soap home businesses because of the 'danger' involved....as Best natural said, frying tortilla chips or burning alcohol off of a savory dish is a LOT more dangerous IMO so I don't get it.


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## cwarren (Aug 5, 2010)

SideDoorSoaps said:
			
		

> Our agency told us if there were a fire even unrelated to the soap, if they see an amount of soap that would be deemed more than personal use (I'm guessing 100 bars or more) that they could deny the claim because they already told us they were not going to cover us since we were making soap, unless, again only for personal use. However, if they see we have a registered business or find out we are insured by another company and a fire breaks out, they will drop us. Could that be fraud also? oh no...
> 
> I did think about if we had an outbuilding, would that be okay, and nope, they said it was part of our property that is being insured by our homeowner's policy. AND, a lady told us also that having a separate policy for the business covering the house and a separate homeowner's policy would be illegal because it would be double coverage, we would need to find a way to include it as an endorsement package on our homeowners. It's getting a bit tedious now with all this info! arrrrggggg...


   I think it's time to look for a new insurance company !!  and I agree I don't know that you need any kinda coverage to make soap.. just a product liability.. if your husband is worried about a fire in the house use garage... (( I don't know that I would bring it up )) expecially if you soap in garage..   Good Luck


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## SideDoorSoaps (Aug 6, 2010)

Our insurance guy just told us NO ONE is PA is going to write us a policy with us *manufacturing* in our home. He would even call the other agencies and talk to them about what would be underwritten. He said they are either lying or don't know what they are talking about. Our policy does not cover home business and an endorsement or rider addendum wouldn't cover soap making.

WELLLLLL...today I talked to a lady who said she is sure someone will give us a policy. And when we do, we are moving all of our business from our agency. I'm not into badmouthing, so no names, just that we are highly upset about this with our company.

We aren't worried about a fire, the insurance people are. And it's a no go on a garage (we don't have one anyway) since it is covered under the homeowner's property. Insurance guy said he doesn't know of any place that even allows such a business in the home due to its manufacturing nature.  While we have some cash saved up, there is no way we could drain our savings to fix our home in case of emergency like that if insurance refuses to pay because we decided to over look that soapmaking wasn't allowed under our policy. We have only lived here for 2 years! The cash is to fix up the place, not fix if burnt down (not that we think that's even gonna happen while soaping). Thanks though for the support![/quote]


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## PrairieCraft (Aug 6, 2010)

Right on, drop those people.  There are insurance companies out there that would insure your big toe if you're going to pay them to.  They are just trying to scare you into staying with them.  The insurance biz isn't doing so hot lately from what I hear from people in the industry.


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## Best Natural Soap (Aug 6, 2010)

oh my gosh. For him to say that the ones who cover others are lying?? Time to go!! buh bye!!

I've found that quite a bit of misinformation surrounds the world of soapmaking. I think for many, it conjures up images of granny standing over an open fire, with a cauldron hanging from sticks tied in a teepee shape- stirring and stirring...

When I was looking for local sources of lye, I kept getting asked if I was making crystal meth... 

As carebear's signature says.... You can't cure stupid.


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## SideDoorSoaps (Aug 6, 2010)

Yeah, I'm thinking that soap making is like some heavy manufacturing or old school witchery looking stuff. I don't know what he is thinking about! He heard LYE and thought meth...that's what i am thinking. And it's a huge deal around the northern part of the state unfortunately. Lye isn't sold much in stores anymore here because of it.

BUT! The great news is that we are getting a quote from another insurance agent on Monday for our home and business policy. I'm SO happy! We have two others looking into it and they know it's possible.  yay!


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## Best Natural Soap (Aug 6, 2010)

Yay for you!! I'm sending good thoughts your way that that'll be the perfect company for you!!

The hoops we jump through to do this.... ugh!!


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## Best Natural Soap (Aug 6, 2010)

Not that it's insurance related- 
But when I was applying for my merchant account for my website (the credit card accepting part, for anyone who hasn't done this)-- they required a 'Business Inspection." 

A guy had to come to my house to ensure that business was actually taking place in my home. I had to show him my "store" which amounted to showing him my website on my home computer, my supplies (a really good smelling cabinet!!), laboratory (my kitchen), my curing room (basement with folding tables), Inventory storage (more tables), shipping facility (a corner of my study with a stack of boxes, tissue paper and labels).. The guy said he had never inspected a home business like this before and kept saying, "Well I'll be..." sounded a bit like Gomer Pyle...


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## SideDoorSoaps (Aug 6, 2010)

I am certainly bound and determined to get this going!

Best Natural- thanks for that tid bit about the internet sales. I'm building my site now and hopefully we get all our stuff planned out the way you have it with specific rooms and places!

I feel the good thoughts coming!!  thanks


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## ewenique (Sep 8, 2010)

I have a related question about insurance for soapmakers - what if you make your soapmaking business a LLC (limited liability company)?  Would that be an option to protect against sue happy folks?


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## SideDoorSoaps (Sep 15, 2010)

ewenique said:
			
		

> I have a related question about insurance for soapmakers - what if you make your soapmaking business a LLC (limited liability company)?  Would that be an option to protect against sue happy folks?



Having a LLC just means that the company can be sued instead of you personally. However, in cases of fraud or other devious scams, persons who own the LLC can still be sued. The best thing about an LLC seems to me that the owners are safe from some liability for acts and debts of the LLC.

We are setting up our company as an LLC because of that protection.


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## Bayougirl (Sep 17, 2010)

Wow, good luck finding an insurance co.  At least you can shop around, here in Louisiana, the only homeowner's policy I can get is through is the state.  No one else will write a homeowners policy where we live because of hurricane Katrina, insurance companies hate to pay out like that.  I had Met life for 20+ years, they didn't hesitate to tell me they won't write homeowners on our house here when we moved from St Louis.  The State offers a policy, but it's a basic policy, no replacement, no extras at all.  That's not even counting a home business.  I make soap now, but don't sell (I do have more that 1000 bars in my house, though).  We will be converting a small building on the property (used to be an apartment) into a house for the soapmaking.  I'll have to shop around for insurance then, I'll probably have a much harder time then you're having doing it, apparently.  More fun to look forward to.  I guess I'll start putting out feelers now and see where it gets me.


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## SideDoorSoaps (Sep 20, 2010)

We finally changed insurance companies! Yay! Now our homeowner policy doesn't forbid us from making soap in our house and we even got all our insurance cheaper! We went with Traveler's and the coverage is very comprehensive for everything.

I sent in our LLC paperwork and that's a relief.


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## Lindy (Sep 21, 2010)

Best Natural Soap said:
			
		

> .....images of granny standing over an open fire, with a cauldron hanging from sticks tied in a teepee shape- stirring and stirring......



Hey who let those pictures out of my soap factory!!!  Sheesh now the secret is out!

I can only comment on insurance here in Canada and it is a different set-up.

*SideDoorSoaps* congrats on finding the right insurance company who is going to meet your needs!


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## khermsen (May 26, 2011)

It is my understanding an LLC will protect personal assets.  The product liability insurance coverage will pay for court and lawyer fees associated with a product lawsuit.


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## Lindy (May 26, 2011)

In Canada (I don't know about the States) if you are proven negligent then all bets are off and your incorporation will not shield you.  However, having said that, incorporation does protect your personal assets in most situations and negligence is relatively hard to prove if you are following best practices.  Liability insurance does cover any damages found against you which is why you want a minimum of $1 million.


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## Kenjifujima (May 28, 2011)

Yay for you! Te mando good thoughts your way is the perfect companion for you!


_spammy link deleted - the mod team_


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