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Hi! I’m Lucy.
Chardonnay and vintage finds lover, founder of the handmade jewelry brand bel monili *and* your new guide to making your handmade business WORK online.
Starting a new business can be incredibly exciting. You get to create a brand, choose a name, pick out your logo, and start marketing your products. One step in this process that many makers fail to focus on is craft business insurance. It’s not flashy and fun like the other parts, I know. But it’s SO important!
Like any other type of insurance, craft business insurance protects you in the event that something goes wrong. However, there are different types of small business insurance, and not knowing which one is right for you can be devastating.
BIG NOTE: I am NOT an insurance professional, and this blog is just an introduction to the topic. Please find a business insurance broker you trust. They can go over all the options with you and help you choose the policies that are right for you and your business.
Disclosure: some of the links below are affiliate links, meaning, at no additional cost to you, I will earn a commission if you click through and make a purchase.
Here’s a cautionary tale to convince you that yes, you DO need insurance.
My friend owned a small handmade business for almost 10 years. She started out in her home, and eventually moved the business into a small office space. When she moved into the space, the landlord required liability insurance. Instead of talking to a broker, my friend went online, found a general business liability insurance policy and purchased it.
While that was enough to satisfy the landlord, it was NOT enough to cover her whole business.
Unfortunately, the worst-case scenario happened. One morning my friend received a call that the building her business was in was on fire! The entire building was lost, and my friend lost everything – her inventory, machinery, computers, supplies…everything.
And because she had only purchased liability insurance, she was not able to recoup any of her losses.
What she should have purchased was a package of insurance that included covering her property, but she made a mistake and paid a steep price. She had no one to tell her what kind of insurance she needed. So I’m glad that you’re here, because now YOU know!
Use this story as the motivation you need to make sure you have the right insurance for your business. You just never know when disaster may strike.
Now let’s go over the types of craft business insurance that you should consider.
Property insurance covers anything owned in relation to the business. So it not only covers the structure or building that the business is in (if you own that), but also all the materials, tools, machinery, and other things you purchase for your business.
This is the type of insurance a landlord will require from you, if you rent a space outside your home. However, it is also protection against getting sued by a customer. You never know what someone may try to sue you for. Liability insurance can help cover the costs of an attorney. If you’re renting a space and somehow cause damages, your insurance can help cover them. If someone gets hurt while in your business, this insurance can help cover medical costs.
If you have employees, then there are other types of insurance you will need.
Depending on the state your business is in, you will need to have Workers Compensation insurance if you have a certain number of employees (varies by state). This insurance covers expenses if an employee is injured while on the job. Check with your state’s requirements to see if you need this insurance.
This insurance helps cover costs if you, as an employer, are sued for violating an employee’s civil or legal rights. This insurance will cover not only the settlement, but will help cover your legal fees. Even if you did nothing wrong, the legal fees can be substantial. This is an optional insurance that you may want to consider if you have employees.
If you are a one woman show, working out of your home, you may think your homeowners insurance is enough to cover your business.
I would strongly advise talking to an insurance broker, because in most cases, this is not true. Your craft business insurance needs will go above and beyond what a homeowners policy will cover.
While not the fun and sparkly side of owning a business, getting the right insurance is critical. Leaving things to chance can lead to devastating results. Please take the time and spend the money necessary to cover you and your business correctly.
If you are getting your craft business started, don’t do it without help! Download my Craft Business Kickstarter! It takes you through every step you need to take to get your business off the ground.
Get all the details and download the self-paced guide here: Craft Business Kickstarter
After running bel monili (my handmade jewelry business) for 10 years, I launched Bloom in 2019 to create a community where handmade business owners could learn, grow, and support each other in this wild venture of small business ownership. Welcome to Bloom!