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Alison Bellamy ACI, Project Director for Walmsley Commercial Insurance Brokers, talks insurance that's designed for your craft business.
As craftspeople, we put a tremendous amount of effort into developing our skills and making beautiful things to display and sell. We try to hone our business skills, thinking carefully about distribution, merchant services, stall design and taxes, but there's one little detail that is often overlooked - insurance.
Some people believe that craft businesses don't need insurance, naively thinking that their household insurance policy will cover it. Others are tempted to keep business costs down by not including insurance, and there are always a few doubters saying they won't pay my claim anyway. However, insurance is hugely important in helping to keep your craft business thriving and successful, and the jargon used can be very confusing, so why not grab a cup of coffee, and I'll bust a few insurance myths and try and help with a few tips:
"I can rely on my household insurance policy, can't I?"
No you can't! Your home policy covers your home and its contents. It's not set up to cover your business, even if you work from home. You may be able to arrange for your policy to be extended to include cover for your business, but the cover provided will be limited and not specific enough for your craft business. A bit like trying to put a square peg into a round hole - it doesn't fit. It's always better to get a policy that provides exactly the right cover for you.
CONSULT THE EXPERTS
Rather than buying a generic off-the-shelf small business policy that covers anyone from a plumber to a yoga teacher, I'd definitely recommend a provider who speaks your language. There are a few bespoke schemes that have been produced specifically for craft businesses and, consequently understand what you do. These should provide you with the right cover at the right price.
All insurance policies are not the same and you should always check the small print
The word 'insurance' is not a blanket term covering every eventuality. Each policy is different and will include terms, conditions and exclusions that may limit the cover provided. What about if you sell your products overseas, is it covered? What happens if you provide demonstrations and workshops, can your policy be extended to include cover for these? Are there are any limits on how many fairs you can attend or how much you can sell on-line? Always read the small print and ask questions to make sure you are really getting the cover you need.
WHAT COVER SHOULD I HAVE?
There are a couple of insurances that are compulsory by law:
Motor insurance If you use your car for business, you'll need to let your insurer know, as there may be use restrictions on a normal private car policy. If you use a van you'll need to make sure that you've got full business use to cover your craft business.
Employers Liability insurance If you employ anyone to help you, you will need EL insurance to protect you against any claims from employees who have been injured or become unwell as a result of their work. You can usually include this as an optional section under a package type policy for the rest of your business. However, if your employees are family members and you're not a limited company, you may be exempt from this requirement. Take a look here for more information: http://www.hse.gov.uk/pubns/hse40.pdf The other covers available are optional but I think some are essential. The level of cover that you decide on will probably depend on the size of your business, and if you're just starting out, you may wish to limit your cover to begin with, but make sure that you can add more cover as your business grows.
This covers you against claims from members of the public for injury or property damage caused in connection with your business. Someone could trip and fall over your stall or at your premises, your stall could blow over and damage someone's car or someone attending a workshop may be injured.
Products liability insurance
This is usually available alongside Public Liability and covers claims for injury or damage caused by your products. Even if it's not your fault, the defence costs alone can reach eye-watering levels and, without insurance cover, you would need to pay these and any compensation award out of your own pocket. These are a 'must have' for all businesses and most craft fairs won't allow you to attend if you can't provide evidence that you've got Public Liability cover in place.
Do I really need it?
For other types of cover, ask yourself a series of 'What If' questions to decide whether you need it or can manage without it. You can include cover for damage to your tools and equipment, stock and computers, including while in transit to and from a fair or one of your distributors, loss of money, business interruption insurance covering your loss of profit if you are unable to trade (although you must have property cover in place as well if you opt for this) and even Personal Accident & Sickness cover to help pay the mortgage and other bills if you're unable to work.
Insurance to suit your business
Finally, make sure that your policy suits your business. If you sell products to customers in the US, make sure that your policy is extended to include this (most standard policies will exclude exports to USA and Canada). If you offer demonstrations and tuition, include specific cover for this as well.
It's all too complicated!
So is crafting to someone who doesn't do it for their day job or as a hobby. Yes, insurance is complicated but with a little help from someone who knows your business, it really can be as easy as 1,2,3.
Let the experts guide you to help tailor your policy to fit your needs and take out cover that isn't relevant. The good news is that craft insurance isn't terribly expensive - premiums can start from as little as £60 annually, not bad for the peace of mind that should something unthinkable happen, you're not alone.
Contact Walmsley Commercial Insurance Brokers trading as CraftCover
+44 (0)345 463 3003