Business Insurance for Soap Making Businesses

Person in suit switching on insurance button from off to on

Business insurance is designed to protect a business owner’s financial assets and is an essential investment for a soap making business.

 

Recommended action box icon

Already know what you’re looking for? Find out how much the right coverage will cost you right now.

Get a Free Quote

About General Liability Insurance

All businesses, regardless of industry, face risks that should be covered by insurance. The most common and comprehensive type of policy business owners invest in is general liability insurance (or CGL).

Some of the risks CGL insurance covers are:

  • Bodily injury
  • Property damage
  • Medical payments
  • Legal defense and judgment
  • Personal and advertising injury

While businesses aren’t legally required to carry general liability insurance, operating without it is extremely risky. If your business is sued, you could end up facing fees totaling hundreds of thousands of dollars (or more). Having a sufficient CGL policy in place to help compensate for these damages is the only way to prevent this type of event from devastating your business.

Learn more about the risks covered by general liability insurance.

COMMON SITUATIONS THAT GENERAL LIABILITY INSURANCE WOULD COVER FOR A SOAP MAKING BUSINESS

Example 1:  If you sell soap out of your home, you may occasionally have customers that want to pick up their order in person. If that individual trips over your front steps or falls inside your home while collecting their order, you could be held liable for their medical bills. A general liability insurance (GLI) policy covers the expenses related to the injury and any expenses related to lawsuits, including settlements, court costs, and attorney's fees.

Example 2:  In some instances, a general liability insurance policy may cover claims by your customers relating to improper advertising. For example, if a certain soap product is advertised as being able to heal dry skin or eczema, and the product does not heal the customer’s excessively dry skin, they could sue you for false advertising. In this instance, your GLI insurance pay for your attorney's fees and any payouts awarded by the judge.

Example 3:  If you regularly conduct interviews and write website articles and blog posts comparing your products to a competitor’s products, you could be sued for reputation harm by the other business, especially if your claims about their products are untruthful, speculative, or your opinion. As a result, the company files a lawsuit stating that you harmed their business with your verbal or written words. When this happens, you may be able to file a claim with your GLI provider in order to cover the expenses related to the lawsuit, including attorney fees and any settlements or judgment awards.

Of course, this is not an exhaustive list of perils a general liability insurance policy will cover, and some conditions may result in a particular peril not being covered. It’s always best to talk to your agent in-depth about the specifics of your policy to avoid blind spots in coverage.

COST OF GENERAL LIABILITY INSURANCE

The average soap making business in America spends between $400-$1,500 per year for $1 million in general liability coverage.

Check out the chart below for a snapshot of average CGL expenditure across a variety of industries:

Graph showing average price of general liability insurance prices per industry

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.

Recommended action box icon

How much will the right insurance cost you?

Find what business insurance will cost for your business right now

Get a Free Quote

OTHER TYPES OF COVERAGE SOAP MAKING BUSINESSES 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 other types of insurance all soap making businesses should obtain:

 

Commercial Property Insurance

Even if your soap making businesses is inside your home, you may still need commercial property insurance to specifically protect your soap making equipment and supplies from unforeseen damage, like from a weather event or fire.

 

Commercial Auto Insurance

If you deliver products to stores and customer homes via a vehicle, even if you also use that vehicle as your personal transportation, you will need commercial auto insurance. This is because many individual car insurance policies do not cover accidents caused while driving for work or for hire.

 

Product Liability Insurance

Product liability insurance protects you in the event that someone becomes injured by your handcrafted products. This includes medical expenses incurred if your products cause an allergic reaction, burn, or other injury.

 

TYPES OF COVERAGE SOME SOAP MAKING BUSINESSES MAY NEED

In addition to the policies outlined above, there are a few other types of coverage your soap making business may require depending on certain aspects of your operations. Some of these might not apply to you, so be sure to ask your agent which policies are right for your business.

 

Cyber Liability

If your soap making business has a website that contains customer information and/or payment methods, you will need cyber liability insurance in order to protect you against lawsuits that are the result of your website getting hacked.

 

Workers’ Compensation

Workers’ compensation insurance is needed if you employ other individuals to help you manufacture and/or sell your soap on your property. This insurance pays for medical bills and other expenses that are caused by on-the-job injuries.

 

ADDITIONAL STEPS TO PROTECT YOUR BUSINESS

Although it’s easy (and essential) to invest in business insurance, it should not be your frontline defense. Yes, insurance will compensate for your business’ financial losses after an incident occurs, but it’s much better to avoid losses altogether.

 

With this in mind, here are three things you can do to better protect your business:

  • Use legally robust contracts and other business documents. (We offer free templates for some of the most common legal forms.)
  • Set up a limited liability company (LLC) to protect your personal assets. (Refer to our guide for step-by-step instructions on how to form an LLC in your state.)
  • Streamline your business’ internal processes. This will remove unnecessary variables from common tasks and create a safe, consistent environment for conducting business.

FREQUENTLY ASKED QUESTIONS

What is included in a business owner’s policy?

A typical business owner’s policy includes general liability, business interruption, and 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.

What is the difference between business insurance and general liability insurance?

“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.

Do I need insurance before I start a business?

You should invest in coverage for your business before your first interaction with a customer. Although the cost of insurance may seem high for a brand new business, it’s best to be proactive when it comes to protecting your assets. After all, you can’t buy insurance to cover a loss that has already occurred.

Will insurance protect my business from everything?

Not necessarily. Certain exceptions may be written directly into your policy, and some perils may be entirely uninsurable. Be sure to discuss the scope of your policy in-depth with your agent to avoid being blindsided by holes in your coverage.