Cloth Diaper Service Insurance
Getting business insurance for your cloth diaper service is essential.
Cloth diaper services need to be protected from numerous unique risks, such as claims arising from the negligence of an employee, breach of contract, or personal injury caused by their diapers.
For instance, if you started to use a new cleaning agent that caused babies to suffer an allergic reaction to the diapers, your business could be held liable for compensation for this injury.
We’ll help you find the most personalized and affordable coverage for your unique business.
Recommended: Next Insurance is dedicated to matching small businesses with the right policy at the best price.
Best Insurance for a Cloth Diaper Service
General liability insurance is — generally speaking — the most/one of the most important insurance policies for cloth diaper services.
Some of the risks general liability insurance covers are:
- Bodily injury
- Property damage
- Medical payments
- Legal defense and judgment
- Personal and advertising injury
That being said, there are also other insurance policies that are useful for cloth diaper services to own, such as:
- Commercial auto insurance: The vehicles used by your service to deliver cloth diapers need this policy in order to protect the driver, other road users, and the vehicle itself in a crash.
- Workers’ compensation insurance: This policy provides protection to workers in case they are injured or fall ill while working.
- Product liability insurance: Should someone suffer an injury they claim was caused using your cloth diapers, this coverage will protect your business from any settlement and legal fees.
Broadly speaking, there are two types of providers that you are able to purchase insurance coverage for your business from:
- Brick-and-mortar providers: These insurers are a more traditional option that have been about for a while.
- Purely online providers: A newer option that is becoming more favored for its ability to provide insurance that matches the quality of traditional providers, but can do this faster and for a lower price.
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Cost of General Liability Insurance
On average, cloth diaper services in America spend between $300 - $800 per year for $1 million in general liability coverage.
Compare the average cost of general liability insurance for a cloth diaper service to other professional industries using the graph below.
Several factors will determine the price of your policy. These include your:
- Location
- Deductible
- Number of employees
- Per-occurrence limit
- General aggregate limit
You may be able to acquire general liability insurance at a discounted rate by purchasing it as part of a business owner’s policy (BOP) rather than as a standalone policy.
A BOP is a more comprehensive solution that includes multiple forms of coverage, such as business interruption and property insurance.
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Common Situations That General Liability Insurance May Cover for a Cloth Diaper Service
Example 1: While delivering cloth diapers to a customer, one of your employees accidentally runs into someone and knocks them to the ground. The individual breaks an arm and sues your company. General liability insurance would cover your legal defense costs.
Example 2: During a visit to your place of business, a customer accidentally trips on some uneven flooring, breaks an arm, and demands you pay for his medical bills. General liability insurance would pay for the injured customer’s medical treatment.
Example 3: A competitor sues your business for libel. While you disagree with the accusation, you want to hire a lawyer to protect your business. General liability insurance would cover your legal defense costs.
Other Types of Coverage Cloth Diaper Services Need
While general liability is the most important type of insurance to have, there are several other forms of coverage you should be aware of. Below are some of the most common types of coverage:
Product Liability Insurance
While you strive to ensure your cloth diapers satisfy your customers, there’s always a chance someone might claim your product caused them harm. In the event of a lawsuit, product liability insurance would cover your legal fees and any required settlement.
Commercial Property Insurance
You made a major investment in the equipment, supplies, and inventory your business needs to meet customer demand. In the event of a fire, theft, or natural disaster, commercial property insurance would cover the cost of repairing or replacing your business-related property. This includes structural damage to your building as well as the business materials you store there.
Workers’ Compensation Insurance
Most states require businesses to carry workers’ compensation insurance for their part-time and full-time employees. This coverage protects your employees if they become injured at work or fall ill after a work-related accident. It not only covers an employee’s medical bills and lost wages if they need time to recover, but also any disability or death benefits stemming from a work-related accident.
Commercial Auto Insurance
Any vehicle you use primarily for business — such as for delivering your cloth diapers — requires commercial auto insurance to protect the vehicle, driver, and others on the road in the event of an accident. Be sure to select a policy that covers not only accident-related vehicle repair costs and medical treatment for anyone injured, but also sufficient protection for any business materials you carry in your vehicle.
Additional Steps To Protect Your Business
Although it’s easy (and essential) to invest in business insurance, it shouldn’t be your only defense.
Here are several things you can do to better protect your cloth diaper service:
- Use legally robust contracts and other business documents. (We offer free templates for some of the most common legal forms.)
- Set up an LLC or corporation to protect your personal assets. (Visit our step-by-step guides to learn how to form an LLC or corporation in your state.)
- Stay up to date with business licensing.
- Maintain your corporate veil.
Cloth Diaper Service Insurance FAQ
Yes, absolutely. You will need to first get a quote from an online business insurance provider like Next Insurance. Next allows you to then purchase a policy immediately and your coverage will be active within 48 hours.
A typical business owner’s policy includes general liability, business interruption, and commercial property insurance. However, BOPs are often customizable, so your agent may recommend adding professional liability, commercial auto, or other types of coverage to your package depending on your company’s needs.
"Business insurance" is a generic term used to describe many different types of coverage a business may need. General liability insurance, on the other hand, is a specific type of coverage that business owners need to protect their assets.
Cloth diaper services are likely to need insurance in order to get started. This industry contains unique risks that mean it is important to focus on acquiring the right business insurance for your cloth diaper service before it launches so that it never operates without any protection.
Note that, depending on your situation, you may be legally required to hold business insurance (e.g., commercial auto, workers’ compensation).
Not necessarily. Certain exceptions may be written directly into your cloth diaper service insurance policy, and some perils may be entirely uninsurable.
Yes, an LLC is meant to create a legal barrier between your business and your personal assets and credit. If you haven’t formed an LLC yet, use our Form an LLC guide to get started.
An LLC doesn’t protect your business assets from lawsuits and liability– that’s where business insurance comes in. Business insurance helps protect your business from liability and risk.