is insurance needed??

[ProudGrandma]

I am going to ask the question first and then give you the back story.

 

Question: If you make homemade products (especially edible, consumable or used on skin or hair or product that you claim does something specific like all natural cleaning supplies) and you sell them on any level do you have any kind of insurance to protect yourself from someone not following the directions or having a reaction regardless of labeling etc?

 

Back Story:  In our little town (of literally less than 400) we have a little store that sells homemade items made in our state.  We also have local farmer's markets all around.  At both of these places people sell everything from wall hangings to candles, to lotions and soap, hand sewn items and so many other things...and at the farmer's markets, they sell produce, but then also home canned items. 

 

One of the ladies who sells her soap at the little store said that she feels it's important to have insurance in case someone sues her for whatever.   

 

She went on to say that even if she just made her soap and gave it away or only sold on a VERY small scale (like to her family and friends) she would still feel like she would need insurance because what if one of her friends gave it away to someone else as a gift and it caused a reaction or something etc....

 

So, thus the reason for my question....do all homemade items that are sold or gifted need to come from an insured creator?  What do you all think?

 

What about items that are sewn or knitted, wood working etc?  

 

I am just trying to wrap my head around what is the purpose of making things for others that if put in the wrong hands could cause unintended harm...another example would be my daughter years ago made well over 300 sock monkeys while in High School and she donated them to a hospital to give to little kids coming in (and they also started giving them to elderly people too) for care.  So, was it wrong that my daughter wasn't insured in case one of her monkeys came apart and became a chocking hazard?  (I never even gave that a thought and that was 5-7 years ago now). 

 

I think people are "sue happy" these days....and many refuse to take personal responsibility or lack common sense....

 

So I am curious as to what your thoughts are on the matter. 

 

Thanks. 

 

 

 

[GoVanGogh]

I sell vintage items at a local shop and used to do markets. I was told I should have insurance in case anyone gets hurt while shopping my products. I do not have insurance, though I have previously considered it. 
If I sold edible products, I would want insurance or at least an LLC to protect my personal assets. 

[stephanier.1765]

I've always wondered about that, especially with consumables or items for children. I'll be interested in the answers you get.

[ProudGrandma]

21 minutes ago, GoVanGogh said:

I sell vintage items at a local shop and used to do markets. I was told I should have insurance in case anyone gets hurt while shopping my products. I do not have insurance, though I have previously considered it. 
If I sold edible products, I would want insurance or at least an LLC to protect my personal assets. 

what is a LLC?

[ProudGrandma]

15 minutes ago, stephanier.1765 said:

I've always wondered about that, especially with consumables or items for children. I'll be interested in the answers you get.

I just have a hard time thinking that the Amish, for example, (who sell at roadside stands) have insurance....but maybe they do.  

[marbel]

10 minutes ago, kfeusse said:

what is a LLC?

Limited Liability Company. 

I don't have one, don't know much about them, except that small business owners use them to separate their business and personal monies. 

[EKS]

46 minutes ago, kfeusse said:

So, thus the reason for my question....do all homemade items that are sold or gifted need to come from an insured creator?  What do you all think?

Keep in mind that the insurance isn't for the buyer, it's for the seller.  She is protecting her own assets in the event that she's sued. 

[ProudGrandma]

3 minutes ago, EKS said:

Keep in mind that the insurance isn't for the buyer, it's for the seller.  She is protecting her own assets in the event that she's sued. 

I know...that is why I am asking....but what if the person isn't selling....but rather gifting....is it still important?  Or what about items like hand sewn baby bibs or crocheted dish clothes or leather key rings?  Is insurance still needed?  How can someone hurt themselves on a crocheted dishcloth?  

[marbel]

4 minutes ago, kfeusse said:

I know...that is why I am asking....but what if the person isn't selling....but rather gifting....is it still important?  Or what about items like hand sewn baby bibs or crocheted dish clothes or leather key rings?  Is insurance still needed?  How can someone hurt themselves on a crocheted dishcloth?  

If someone is giving something away, and it somehow causes harm, wouldn't that be covered by the homeowner's liability insurance?  (That leaves out people who don't own homes, I know.) 

[Innisfree]

13 minutes ago, kfeusse said:

I know...that is why I am asking....but what if the person isn't selling....but rather gifting....is it still important?  Or what about items like hand sewn baby bibs or crocheted dish clothes or leather key rings?  Is insurance still needed?  How can someone hurt themselves on a crocheted dishcloth?  

IANAL, or an insurance agent, but I suspect that might be related to the volume of things they give away, and the recipients. 

If you crochet a dishcloth for Aunt Mabel, you’ll probably be fine. She loves you, and she’s got enough common sense not to eat it, or unravel it and strangle herself, or whatever.

If you make and distribute large numbers of dishcloths or sock monkeys or whatever, and give them to lots of people you don’t know, who don’t care about you, and who might be children, or have mental illnesses, or compulsions, then I do think you are leaving yourself open to problems. In that case, as a risk-averse person, I’d prefer to have insurance. Issues are still not likely, but why roll the dice?

[Melissa in Australia]

Here people selling cooked items at a market have to have a commercial kitchen that is up to health standard and has been approved for commercial operations. . 

Excluded from that regulation are people making cooked items as a one off to donate to fund-raiser stalls. But even then all ingredients have to be listed 

[Toocrazy!!]

The gifting part wouldn’t worry me so much, but any time you’re regularly selling something as a separate business you should technically have created a business entity, be licensed in whatever way is required in your state, and have an insurance policy. I don’t think it’s the insurance part is law in most places, but I’d check into the costs and run the numbers on the risk and coverage. 

[Melissa in Australia]

And if you sell things from your house, like honey or eggs you need commercial insurance. There have been people here who sold eggs from their house and had a fire at their house completely unrelated and the house insurance company refused to pay saying the building was used for commercial operations

[ProudGrandma]

7 minutes ago, Innisfree said:

 

If you crochet a dishcloth for Aunt Mabel, you’ll probably be fine. She loves you, and she’s got enough common sense not to eat it, or unravel it and strangle herself, or whatever.

 

my friend added to this idea...what if Aunt Mabel takes your gift (because she already has several dishcloths) and gives it to another friend or donates it to a charity....then what?  Can that dishcloth be traced back to you somehow?  

[Carol in Cal.]

This is why I’m not taking advantage of our local cottage food law.  I don’t want to mess with the insurance issue, and I don’t want to be liable if someone develops an allergy or something from some food that I make to sell.  I’ve never worried about gifts I make though.

Edited August 21, 2023 by Carol in Cal.

[ProudGrandma]

5 minutes ago, Melissa in Australia said:

And if you sell things from your house, like honey or eggs you need commercial insurance. There have been people here who sold eggs from their house and had a fire at their house completely unrelated and the house insurance company refused to pay saying the building was used for commercial operations

so this makes me now want to ask the lady who I buy eggs and honey from if she has insurance.  Her daughter also makes cupcakes and sells those....and I know they don't have a commercial kitchen...hmm...and then there is a guy in our area that makes pizza from his house and sells in mass quantities of 50 or more each time he makes them....wonder if they have insurance....the list could go on and on. 

[Toocrazy!!]

I’d wager Most people do not have insurance for their small business. It’s not on their radar, unless someone they work for asks for it. 
Most of the time the cost is based on volume of sales, because that increases risk, so it could be very affordable. 

[Bootsie]

20 minutes ago, kfeusse said:

so this makes me now want to ask the lady who I buy eggs and honey from if she has insurance.  Her daughter also makes cupcakes and sells those....and I know they don't have a commercial kitchen...hmm...and then there is a guy in our area that makes pizza from his house and sells in mass quantities of 50 or more each time he makes them....wonder if they have insurance....the list could go on and on. 

The legality of this will depend upon state law.  In my state, cottage laws would allow the selling of eggs, honey, and certain cupcakes without a commercial kitchen.  However, you are required to take a food safety course, label your products a particular way, limited in the amount of annual revenue.  However, making pizza in a home kitchen would not be allowed; anything that must be kept in a particular temperature range (either heated or refrigerated) for food safety is not allowed to be sold out of a home kitchen.  (So the cupcakes would not be allowed to be sold if they had a cream cheese icing that needed refrigeration, for example.)

[KungFuPanda]

I have a very small dance business; never more that 50 students and most are longtime students and dear friends. I always hold insurance. If you’re not making enough to buy insurance than it’s not worth being in that business. Mine is cheap . . . maybe $300 a year?  Insurance for a soap business is probably much cheaper. I’d have it. It only takes one yahoo to lose your house. Anything from a reaction to your display tipping over onto someone. If a person seeks medical care they don’t have to be “Sue happy.” The insurance companies will set the wheels in motion without consulting them.  Unless you exclusively sell at events that events that hold their own insurance OR if you’re not selling the stuff, I would keep insurance. 

[Bootsie]

People can try to sue you for all kinds of crazy reasons in our society.  They may not win, but if they can find an attorney willing to take their case, they can cause many headaches.  Homeowner's policies will cover some situations.  Umbrella policies can provide additional protection.  

[elegantlion]

I would wager that a lot of small crafters do not have insurance. However, if you make anything designed to use on skin, take internally (drink, etc), or is designed for children, I would want insurance. If I were making accessories, I wouldn't pursue it unless dictated by the law. The exception would be if I'm selling like at faires, etc via rented booths. At our ren faire last year the winds were horrendous, vendor tents were blowing over, etc. I would want coverage for things like that too - like if my tent/table fell and injured someone. 

It's been a while since I looked but coverage didn't seem very expensive. 

[Katy]

I would both file as an LLC and get insurance, yes. 

[Frances]

4 hours ago, GoVanGogh said:

I sell vintage items at a local shop and used to do markets. I was told I should have insurance in case anyone gets hurt while shopping my products. I do not have insurance, though I have previously considered it. 
If I sold edible products, I would want insurance or at least an LLC to protect my personal assets. 

I don’t think an LLC alone is enough, you would need business insurance also, especially if you are not carefully separating business and personal expenses, assets, income, etc. We used to think an LLC alone was enough, but in researching it, that doesn’t appear to be the case.

[QueenCat]

5 hours ago, GoVanGogh said:

I sell vintage items at a local shop and used to do markets. I was told I should have insurance in case anyone gets hurt while shopping my products. I do not have insurance, though I have previously considered it. 
If I sold edible products, I would want insurance or at least an LLC to protect my personal assets. 

Agreed, one definitely needs to protect their personal assets. 

[prairiewindmomma]

My thoughts?

Everyone should carry an umbrella policy regardless of whether they own a business or a home or not.

People who own a business, even a small tiny one, should set up a LLC or the like to separate business assets from personal ones, and should insure their business.

Judges and juries are wild. No one thinks they would die over a milkshake, but apparently a few people have this year at a Tacoma restaurant. Listeriosis. I suspect wrongful death lawsuits are coming. The deal is, whether or not an individual is sue happy or not.....most insurance companies are, and if an individual has sought medical care, the insurance company can force them to subrogate their right to sue and sue the business/property owner directly. The individual doesn't have a choice if they want their claim paid. Since a single trip to the ER can bankrupt some folks.....it just seems obvious to expect that anyone with a claim is going to come after you directly or indirectly.

[prairiewindmomma]

4 hours ago, Melissa in Australia said:

And if you sell things from your house, like honey or eggs you need commercial insurance. There have been people here who sold eggs from their house and had a fire at their house completely unrelated and the house insurance company refused to pay saying the building was used for commercial operations

This also.  If you sit and read through the very long initial policy disclosures of your home owner's policy, it's very very very very likely that there is a small paragraph with the clause that if you do business out of your home (and this is defined in the policy as to what this means), then xyz. This varies depending on the state that you live in, but many insurance policies will refuse to pay claims if there is commingling.  Remote (digital) workers for a larger company are the general exception to this, but it's something to be aware of. 

[prairiewindmomma]

5 hours ago, marbel said:

If someone is giving something away, and it somehow causes harm, wouldn't that be covered by the homeowner's liability insurance?  (That leaves out people who don't own homes, I know.) 

Umbrella policy.

They can sue you even if you don't own a home and can get claims for expected future assets or wages. 

Here's a general, very short explanation of what an umbrella insurance policy and how it functions: 

https://www.investopedia.com/terms/u/umbrella-insurance-policy.asp

 

[City Mouse]

For gifting only,I don’t think I would worry about insurance, and I have given homemade holiday gifts in the past. I do think it would be a good idea to have insurance for any kind of business. I have my own business providing specific services to schools. I am required by some school districts to have insurance. Some don’t require it, but it still a good idea. I pay about $250 per year for $1,000,000 coverage.

[marbel]

11 minutes ago, prairiewindmomma said:

Umbrella policy.

They can sue you even if you don't own a home and can get claims for expected future assets or wages. 

Here's a general, very short explanation of what an umbrella insurance policy and how it functions: 

https://www.investopedia.com/terms/u/umbrella-insurance-policy.asp

 

Yes, as soon as I posted I thought, wait, that isn't right, what is the type of policy? So I am having a big duh moment right now. 🤣