Many candle-making businesses start in the home, and it can be difficult to determine which costs are necessary. Insurance appears to be a cost that you can put off, but learning what business insurance can prevent proves otherwise.
It is generally recommended to obtain insurance when selling homemade candles. Candle sellers of any degree are encouraged to have at least general liability and product liability policies. These should cover risks relating to faulty products, consumers, and sales.
In this article, we will look at what risks you face when selling homemade candles. And how insurance works to reduce the impact of any unfortunate situations. Keep reading as we explore what you need and what you can expect when determining how insurance can help your candle business.
Risks of Selling Homemade Candles
Getting into selling homemade candles is not considered a high-risk business as long as you know what you are doing; but candles can be considered a high-risk product.
When you are working in your home, you deal with high temperatures and sometimes fire; leading to an increased chance of something going wrong as you carefully pour your wax. Even a small accident can cause hundreds or thousands of dollars in damage.
The candles you sell can pose a major risk too. Faulty products outside the scope of your preparation can come back to haunt your business; such as candles that burn too hot or containers that overheat and shatter.
You also trust consumers to use your products as instructed; but they never fail to spill hot wax all over the carpet or burn their hands; and come back to blame your product. If you are selling at a fair, it only takes the wrong person tripping over a display to turn the incident into a lawsuit.
Most of these risks have nothing to do with the integrity of your effort, but the time, money, and research involved to prove your innocence or deal with the issue can easily extinguish your homemade candle business.
Benefits of Insurance When Selling Homemade Candles
Luckily, business insurance exists to take on the weight of these risks for you. Instead of putting your life savings into an attempt to cover legal fees, you can pay premiums to the insurance company in exchange for assistance when issues arise.
What you can get out of an insurance policy varies depending on:
- What is covered in the policy
- How much you pay
- How much the policy covers
Purchasing an insurance policy for your homemade candle business ensures that you will be covered if:
- An accident occurs in your workstation
- A customer ends up with faulty products
- A customer makes a mistake when handling your product
If you have any employees for your homemade candle business, the right insurance policy will also provide coverage in case they are injured while working.
The combined peace of mind and financial protection is well worth what you might need to spend monthly, semi-annually, or annually on premium payments.
What Types of Insurance You Need
There are three basic types of insurance that you are suggested to purchase for your homemade candle business:
- General liability
- Product liability
- Public liability
Many insurers offer customizable plans to fit the specific needs of your business, depending on how you operate and how large your business is. Make sure you check with local laws and requirements for any marketplaces you intend to utilize for what they need your business to carry.
General liability can be an all-encompassing policy that provides coverage for:
- Employee injuries
- Customer injuries
- Property damage
These policies are usually straightforward and easy to understand. They cover a wider variety of risks, and they can handle product or third-party claims.
Many municipalities, vendors, and larger craft fairs require you to carry general liability insurance to sell your candles in those areas, and this tends to be the bare minimum of what you should purchase.
Make sure you read through the policy thoroughly and ask any questions you have before committing to it. While general liability policies cover quite a bit, it can be difficult to absorb all that knowledge in one sitting.
While general liability may cover product-related risks, this is not guaranteed and the coverage is not always sufficient. Purchasing an additional policy for product liability guarantees more coverage relating to physical harm or damages by a product.
Product liability does not guarantee your innocence in the case of a lawsuit, but it will cover any legal fees that come out of the situation. This helps you pay for medical bills or property damage related to your product without risking bankruptcy.
A policy that covers public liability will protect your business from any damage caused to members of the public. This type of policy expands on the protections offered by a general policy for covering legal and medical fees related to your business.
Your need for additional public liability coverage may change depending on how you sell your candles, where you sell them, and what is covered in your general policy.
Cost of Insurance for Homemade Candle Businesses
The cost of insurance for a homemade candle business varies quite a bit. Monthly premiums can cost anywhere from $60 to $90. You can save by opting for an annual premium payment, but this is a major investment that averages out between $700 and $900.
Aspects taken into consideration include:
- The size of your candle making operation
- Where you sell your candles (online, retail shop, fairs, or a combination)
- Your annual sales revenue
- Your credit score
- Any past insurance claims you have had
- How you deliver your products
This might seem like a shocking cost that you would rather do without (especially if you are just getting started) but the alternative is bound to cost you much more.
In the unfortunate event that you are hit with a lawsuit, you can lose your business and even personal assets (depending on how your business is structured) just to prove your innocence.
It is best to treat business insurance as a necessary cost that you cannot operate without, right up there with your business supplies. If (and likely when) you need to file a claim, you will be thankful to have the protection offered by such a policy.
What to Ask Yourself When Shopping for Insurance
To determine what you need when shopping for insurance, you should have a good idea of what you need. Look at the different activities you perform when making your candles, and take stock of the risks involved in those processes.
Keep any legal requirements in mind, and do some research on what your options would be if someone decided to take legal action against your business.
Insurance can be difficult to navigate, but most companies do their best to explain things well and get you exactly what you need within the scope of your budget.
Does homeowners’ insurance cover this risk for a home-based business?
The answer to this question depends on the policy in place. For the most part, insurers will require you to expand your coverage or take up an additional policy to cover any potential damage caused by candle-making operations.
Does a homemade candle business need workers’ compensation?
This relates to the laws in your area and the size of your business. Many municipalities require workers’ compensation when you reach a certain business size, and you may choose to offer this to any employees you take on as a benefit.
Will insurance preserve my reputation?
An insurance policy can only cover expenses related to a claim, and it will not prevent you from any negative press surrounding lawsuits or angry customers. Insurance will give you a fighting chance to combat any of these issues and prevent your business from going bankrupt.
Looking to start your own candle making business, check out my startup documents here
Please note that the contents of this blog are for informational and entertainment purposes only and should not be construed as legal advice. Any action taken based on the information provided in this blog is solely at your own risk. Additionally, all images used in this blog are generated under the CC0 license of Creative Commons, which means they are free to use for any purpose without attribution.
Meet Shawn Chun: Entrepreneur and Candle Business Fan.
I’m a happy individual who happens to be an entrepreneur. I have owned several types of businesses in my life from a coffee shop to an import and export business to an online review business plus a few more and now I create online candle business resources for those interested in starting new ventures. It’s demanding work but I love it. I do it for those passionate about their business and their goals. That’s why when I meet a candle business owner at a craft fair, farmers market, retail location or anywhere else I see myself. I know how hard the struggle is to obtain and retain clients, finding good employees all while trying to stay competitive. That’s why I created Candle Business Boss: I want to help candle business owners like you build a thriving business that brings you endless joy and supports your ideal lifestyle.