This is part 3 of the Starting Your Candle Business series. If you haven’t already, please be sure to read part 1 and 2!
You’re ready to kick off your candle business, but there’s one lingering question…..
Do I need insurance for my business?
The best answer is YES. Do you legally HAVE to have it in the United States? No. But, it is definitely recommended that you get some liability insurance just in case.
Can you imagine going along in your business, building it up, things are going great, candles are flying out the door, the money is rolling in. Then, someone starts a fire in their home while using one of your candles…..
Well, it’s their own fault, you say, and I had a warning label on the candle, you say.
That may be true, but they could still take you to court and even if the judge rules you are not at fault, you still have all those legal fees to pay for and that alone could cripple your business and even hurt your personal life!
Now imagine that were to happen when you are still trying to get your business off the ground and you aren’t making much money yet! Yikes!
So, really, it is very important to get some insurance for your business. I am hoping that by writing these articles on starting your candle business, that you will be able to get off to a great start and be able to pay for that insurance with the profits from your business fairly quickly.
What if you sell only tarts/wax melts or flameless candles?
From doing some research, I’ve come to the conclusion that wax melts, at least, could be looked at along the lines of soap, although maybe not quite the way soap is, since you are not using the melts on your skin. There is still the risk of someone’s child putting them in their mouth, or even someone getting a rash from handling the melts, who knows! There definitely is not the high risk like candles with a flame, but there is still risk, as with anything. You would need to decide whether you are comfortable taking that risk. You might find, however, that it could be easier to find business liability insurance for flameless, non skin care products such as melts, but that is something that each insurance company is probably going to differ on, and you’ll need to discuss with your agent and see if they can work something out.
How much is business insurance for my candle business going to cost?
I was able to contact a few insurance companies that actually will at least consider covering candle makers. The ballpark figure I got? $500-$1000 a year. Now, the cost is going to depend on lots of different factors about your personal business, so in order to get an accurate quote, you will need to contact an insurance agent yourself. That way they can look at your specific needs.
Apparently Farmers will cover candle makers, and I’m sure you can find an agent in your area since they are a very large insurer.
Here are the insurance companies/agents I contacted that do provide business insurance for candle makers. I may add to this list as I hear of others:
Agent: Andrew Core
Insurance and Financial Solutions Registered Rep
Farmers Insurance Group
541-359-4791 (Office)
541-221-1693 (Cell)
541-359-4797 (Fax)
acore1@farmersagent.com
http://www.farmersagent.com/acore1
260 E 15th Ave Suite D
Eugene, OR 97401
Agent: Lori Paul
Business Insurance Solutions
107 West Q Street
Springfield, Oregon 97477
(541)744-1806
Here are a couple other places that offer insurance specifically to crafters, soapmakers and candle makers:
- Indie Business Network– Seems to be a good one from what I’ve heard from some other candle/craft makers. The insurance carrier is Great American Insurance Group and the broker is: Veracity Insurance Services, Inc.
Here is a price quote from the Indie Business Network website:
“$1,000,000 annual aggregate coverage is $398 per annum, or $2,000,000 annual aggregate coverage is $453 per annum. Additional premiums will apply for larger companies and for those requiring additional coverage. Product liability insurance is a benefit of membership in Indie Business Network, and the two items are separately prices. Membership is $150/year.”
- Insureon The link takes you to a very informative article about the different types of insurance for crafters/candle makers. You can fill out a form online to get a quote too.
I hope this is enough info to get you started! I am hoping to do more research on insurance companies and maybe create a directory eventually. But what I would do, if I were you, is start with the companies above if you can, and get a solid quote. Also be sure to look up local brokers and see what they can do for you. Write down any questions you have ahead of time so you can be sure to ask them when talking to the insurance agent.
Be sure to shop around, take the time to get the best quote with a company you feel comfortable with!
Do you have liability insurance for your candle business? If so, I’m sure everyone would love to hear your experience and who you go through for insurance, so post about it in the comments!
Next:
How to Price Your Candles Part 1
YES, YES, YES, and YES!!!! Unless of course you are prescient (can absolutely tell the future) omniscient (can absolutely control the future), or just plain silly. All it takes is for one person to ignore your candle burning instructions in pamphlet form and on the candle itself, for you to make one bad candle that burns too close to the side or gets too tall without trimming, or an idiot to put it on a bookcase where the tip of the flame is under a shelf {a physicist friend of mine did that in spite of my warnings)} and all bets are off. The same is true of soap. Even if you clearly list all ingredients some idiot will “forget” that they are allergic to the lovely lavender you put in your soap. If it send them to the hospital they can ‘try’ to sue you for negligence and there you are. I had my own small business for a couple of years and would never have done any of that without insurance – it cost me about 900.00 a year for full liability for soap and candle coverage. Anyway just my $.02. Don’t let it scare you – just know that you are really taking a risk if you sell without it.
I finally found Indie Business Network after many years of trying to find an insurance company to cover me. I went to Farmers and was told they don’t cover candle makers, but I’m in CT, so it may vary by state. I do not have a shop, I make my candles at home and sell them at craft shows, farmer’s markets, etc and event insurance was perfect then, but now that I am in more stores and doing more events, I thought it was time for an annual policy.
hi laura, i have some questions for you about starting a candle business in ct. Would you like to help me out? please contact me on my fb page Lite n Scent
I have a question. What is the difference between registering as an LLC and just having insurance coverage? Would you recommend both?
Jessica,
Registering an LLC creates a (mostly) separate entity than yourself. You can then use that entity to conduct business and for whatever reason, the business goes “out of business”, you’re (usually) not on the hook personally (assuming you didn’t personally guarantee payments etc…)
The upside of using a separate entity is many fold, including tax exposure and greater flexibility. Another is the limited liability. Some will use a separate entity and falsely believe that they won’t have personal exposure. The problem lies in the fact that you don’t have to do anything wrong to get sued, and very often if a LLC is sued, the owner(s) are also named.
Homeowner’s insurance typically has liability coverage, but almost always excludes anything that’s connected with a business.
In other words, if your business gets sued and the owner is named, and there’s no insurance, the owner will have to “lawyer-up” on their own dime, and possibly in a different state or away from a local court.
For most small business owners, being in business without insurance is the same as betting that nothing bad ever happens to good people.
Lawsuits don’t have to come from customers. Under Armour has sued Body Armor (sports drink company), Salt Armour (fishing apparel), Armor & Glory (religious based apparel).
The fact is, most small business owners don’t know what they don’t know.
There’s the whole “piercing the corporate veil” thing as well, but that’s beyond the scope of my answer.
That said, I do have the appearance of a bias. I sell commercial insurance for 1 Reason Insurance, but I’m certain not one client would say I ever gave a high-pressure pitch. It’s not my style, and it’s not appropriate.
Hello! What is the difference between registering as an LLC or getting insured for a candle making business? Are both one in the same? Or should I register as a ole proprietor and get insurance? I am stuck on what I should pick as my business entity for my small candle business and happened to come across this forum ( Thank God !) Overall, I want to make the right decision!
Registering as an LLC and/or getting insurance are not related to each other in the context of your question.
An LLC (limited liability company) is a form of company structure. For example, if you simply start selling candles, you’re a sole proprietorship automatically. In order to avoid sole proprietorship / partnership (for example with a spouse), you must affirmatively make an effort to change the formation of your business.
Should you start an LLC? That depends on your sales and the amount of assets you have at risk. For a typical person selling a few hundred dollars worth of candles a year, it;s not likely worth the extra expense and paperwork. For anyone serious about making a business out of it, an LLC or corporation may not be legally required, but it’s “common sense” required (because of tax savings and liability exposure mitigation).
There are four ways to tax an LLC — https://1reason.com/ins/insurance-tips-advice/income-tax-options-for-your-limited-liability-company-llc/
For insurance – The question is do you have assets that are worth taking from a lawyer? If yes, then the question is do you want to pay to defend your assets (legal costs) and self insure (no insurance and you will pay any settlements/verdicts), or transfer the risk to an insurance company.
Your assets and revenue are the two biggest drivers in the decision process. That said, anyone in business with an attitude of “I don’t get sued because ____________(insert famous last words)” is right, up to the point they’re not….. I have an insurance agency, so someone could say I have a bias …
Best of luck
Bob
I have heard of “home based business” insurance being a necessity for home-based candle makers. Does the Indie Business Network provide this sort of coverage? I see rented premises insurance but wondered if this included home-based businesses or ones where the business owner actually owns the house where the business is run out of. Just kind of confused by the language they use and if the policy is really all-inclusive or if there are other policies worth adding from other sources.
Blythe – (generally speaking based on the states I’m licensed in, and not necessarily specific to your state) There are various “home based business” insurance products available, albeit most are geared towards “professional trades” ie accountant, lawyer, online business, sales office (where there is low foot traffic if any) etc…
As a candle maker, the type of coverage desired is in (and I use this term loosely) manufacturing, with candles being the product manufactured.
“Rented Premises” as I believe you’re referring to within this context is often found as part of a general liability policy and is designed to cover losses that the business operation may cause to the occupied building of the business. And for protecting your home (or rented/leased building), this is often the part of general liability that offers protection.
Regardless, there are two key areas of vulnerability, one is when you sell a product. If the product is defective and causes injury, you may be strictly liable. Defective may include a defect in design, manufacturing, and/or warning. So for example, if you don’t have a warning that the candle may cause a fire, your candle may be defective and if it causes a fire to someone’s home, the buyer may have a valid claim against your insurance (or you if you don’t have coverage). There’s a reason why when we buy some things there’s seven gazillion warnings , with some of them appearing (to me anyway) kinda dumb, but each “dumb” one is often born from a lawsuit.
The next type of vulnerability is your own home/office/place of making. That’s called property coverage and there are two types. “real property”, which is improvements upon land, i.e. buildings and homes, and “personal property” which is (generally) anything physical that isn’t real property. In order to protect your building and personal property, the CORRECT type of property insurance is required. Correct meaning commercial property coverage.
Going back full circle, the type of coverage is “commercial general liability” to protect you from others (protecting your assets from someone else injured as a result of your product), and “commercial property” (personal and building) that protects you from you (you being your business and employees).
It’s a big big big mistake to think your homeowner’s policy offers any type of protection from anything caused by your business. In other words, if your house burns down (or anything else) due to “business pursuits”, do NOT expect your homeowner’s policy to approve a claim unless you already have in writing from your agent that it will for the type of claim you’re filing. In other words, have a conversation with your agent in detail of what you’re doing, and either get an endorsement that allows coverage for your activity, or get a separate policy.
The key point and takeaway, use the above to help you understand what questions and the type of conversation you should have with your insurance advisor, and don’t assume anything (including the above) without having it in writing from your trusted advisor.
I need help getting Insurance for making candles in Texas. Anyone know how to help me I’ve call all kinds of insurance companies and no will give me insurance so I need to know what to do. Please help
Brandon – I would be happy to provide an insurance proposal to you. Also, and maybe as important, I typically help my clients grow their business and offer guidance. I’m licensed in a handful of states, and Texas is one of them. 1 Reason Insurance is the name of my agency.
Hi. I am also looking for insurance for my candle company in TX. I would like to get with you about a quote.
Deby Sebastian, Blessings Candles
I am in Michigan can you assist? Looking into all of the aspect before starting the business and cost of insurance is a biggie.
We here at Andy Core Insurance of Farmers would love to handle any and all of your candle making needs, but only in the state of Oregon, please.
Robert does your company offer insurance in West Virginia?
Hi Everyone, Donna Maria here from the Indie Business Network. Thank you for including the coverage offered to our members in you blog post! Our prices have actually decreased since your article was published, so I thought I’d share that $1M in coverage is now $275, and $2M in coverage is now $325. You can purchase business property coverage on top of that if you’d like. Thanks again!
Donna, Do you cover small businesses in WI?
Hi Liane,
I’m based in Eau Claire WI (albeit am licensed in over a dozen states).
Hi Donna. Do you sell insurance for candle companies in Texas?
Insureon does not cover candlemaking 🙁
I live in Tennessee, retired and disabled. Started a small candle company, may 200 Candles a year. Do I need to purchase insurance? I attend weekly at our farmers market and sell a few candles, there is a Amish lady that also sells candles along side of me. ( not with me just next to me) I have spoke to her about it and she don’t carry insurance on her candles. Bee’s waxed hand rolled. Is there a difference?
Hello Elizabeth,
“It depends.” There’s more than one perspective. If you’re retired, disabled, live on a relatively small fixed income and have no “real” assets and plaintiff can attach, some could make a valid argument you’re “judgement proof,” and from a financial view, don’t “need” insurance. Some others, will purchase insurance in case someone gets hurt from a mistake etc. that they’re not left twisting in the wind because the maker is “judgement proof” and doesn’t have any assets that could be used to cover medical and other related expenses.
Reference to the Amish lady. I have Amish and related clients for various businesses, and they often get it out of contractual and/or legal requirements. Sometimes they partner with another who actually buys the coverage because it’s against their views. I have a VERY limited experience with Amish beyond my limited exposure to my clients, albeit I have the impression that some have a LOT of assets (land etc…) and therefore, a huge exposure that they may not realize they have.
I uploaded a video today discussing some pros and cons of starting an LLC, and I used candle making as one of the examples of why insurance is more important from a liability point of view for candle makers.
I’m licensed in about 15-ish states and have rates for a top-tier insurance carrier well under $1000 for most candle makers.
youtu.be/U_1Fdhc96Vo
My kids have a small candle business and have only sold to friends and family so far. They want to take it to Etsy, but my husband wants them to have insurance first. Thoughts on kids needing insurance? They would be taking it up a notch and probably selling 30-40 a month in order to cover the costs. The candles DO have warning labels.
If I just start off selling to friends and family will I need insurance or file taxes for it? I just really need any extra money I can get and I am no where close to being able to afford insurance.