Running a craft business comes with risks just like any other enterprise. Craft insurance can help protect you from financial and legal issues as a result of stock loss or accidents suffered by a customer, a staff member, or yourself.
As a small business owner, it’s essential to identify and understand the risks associated with your business. Our guide looks at your legal obligations, and the types of cover you can consider if you wish to get insured for protection and peace of mind.
Do I Need Insurance to Sell Handmade Crafts?
As a handmade craft seller, the protection offered by insurance can prove vital. Whilst it is not a legal requirement, it can be a crucial investment to protect yourself and your business from a range of risks and liabilities.
You may regularly attend craft fairs or sell your crafts online. In both cases, you should consider policies to cover against risks such as injuries to customers, faulty products, and other legal liabilities. As a small business owner, you could find yourself being held personally liable for damage or injury arising from your business activities.
Types of Craft Business
The number of craft businesses in the UK is increasing every year. With the need for flexible working to support family commitments, this type of business offers the perfect solution.
However, running a business also involves an element of risk which can have an impact on your craft business finances.
Let’s take a look at the type of risks different types of craft businesses might face which can be mitigated by insurance:-
Home Craft Businesses
Selling crafts from your home is one of the easiest ways to start a business selling handmade crafts. Set up costs will be low and you don’t need to worry about hiring halls and other venues.
However, there are risks you will need to take into account when crafting at home. Your domestic policy will not cover you for losses related to business activities in your home, nor will it reimburse you if a customer is responsible for a theft.
If a customer suffers an injury whilst collecting products from your home, or as a result of a faulty product, you might have to defend yourself against legal action and pay compensationi.
Selling Crafts Online
It can seem straightforward to operate a craft business on the internet but this isn’t without its risks.
We all know the saying, “technology is great when it works”. You need to factor in potential downtime and technical issues.
Assuming you operate your business from your laptop, any technical hitches can prove costly and stressful. Websites are vulnerable to cyber attacks and sometimes domestic internet problems can impact your ability to trade.
Craft Fairs & Local Markets
One of the most successful ways of getting your brand out there is by appearing at local craft fairs and markets. What better way to liaise with the public and entice them with your crafty wares?
As soon as you trade in public, you have a new set of risks to navigate. You need to be sure your stock is tucked away safely and won’t get stolen. It’s important to keep your selling space free from clutter to help prevent trips and falls.
Sometimes events you’ve invested in attending will be cancelled, or you may not be able to attend. All of these issues have the potential to affect your business finances.
See Also: Public Liability Insurance for Craft Fairs.
Pop Up Shops
Pop up shops are convenient, affordable and a great way to run a craft business with low overheads.
You are still at risk of stock and equipment being damaged or stolen or the public getting hurt while in your shop or because of a faulty product you supplied.
Pop up shops can also mean you need to pack up and take away your stock at the end of the working day. Regularly transporting your craft from A to B then back again means there’s risk of damage or loss.
Types of Insurance Policy
Due to the broad nature of craft businesses and how they operate, there are many different insurance policies to consider.
Different types of crafters will require differing insurance types, so it’s vital you understand the risks posed by your own trading model, and decide if insuring against them is the right investment.
Here’s the main types of insurance craft business owners might wish to consider, and what cover they offer:-
Public Liability Insurance
Public liability Insurance protects craft businesses from any disputes or legal claims made against them.
Running a business means you will come into contact with people on a day to day basis. Dealing with the public cab create problems from time to time.
Having public liability insurance will protect your craft business from:-
- Injuries to the public while at your location.
- Any loss or damage to third party properties.
- Complaints made by visitors, clients and customers.
- Injuries that are caused by your products.
- Death as a result of a product, for example, a faulty candle with inadequate instructions.
Product Liability Insurance
Product liability insurance will protect crafters against any legal claims due to injury, illness, or damage to property caused by a faulty product they supplied.
These policies cover legal expenses and compensation payouts. This type of insurance policy is particularly valuable to crafters who run candle businesses as well as those who make and sell wax melts.
Product liability insurance is valuable in a whole range of scenarios:-
- If your product harms or injures someone on your property.
- If your product harms or injures someone on their property.
- If your product damages their property.
- Faulty products.
- Legal claims relating to inadequate product labelling or safety instructions.
Stock & Business Equipment Insurance
Stock and business equipment insurance protect crafters who rely on their supplies to keep their business running.
A business without its stock or machinery will be unable to trade. Some of the tools and equipment can be costly, therefore, it makes sense to get it insured. Domestic insurance will not cover loss of items needed to run your business.
Having your stock and equipment covered can offer great peace of mind in the event of a house fire or theft.
Equipment that you may need for a craft business could be things like; laptops, phones, printers, pop up shop till and card machines.
Stock and equipment insurance cover includes:-
- Damage caused by catastrophes such as floods or fires.
- Damaged goods in transit.
- Stolen goods.
- Accidental Injury.
- Covers compensation rewards.
Employer’s Liability Insurance
Many crafters hire staff to help with the day to day running of the business. This might involve them liaising with the public, selling items or being involved in a manufacturing role.
When you hire help for your business, you need employer’s liability insurance. Employers liability insurance is a legal requirement when you employ staff within your craft business.
This type of policy offers cover for claims and legal action related to work related injury or illness which your business may be liable for.
A Few More Insurance Policies To Mention:
The above are some key policies that crafters should look into and make informed decisions about. However, the list isn’t exhaustive and there are other craft insurances available that might be of benefit.
- Home Emergency Insurance.
- Business Interruption Insurance.
- Terrorism cover.
- Personal Accident Cover.
- Professional Indemnity Insurance.
How to Decide on the Right Craft Insurance Cover
Carrying out a thorough risk assessment is a great way of establishing what you need to think about as a craft business owner.
Once you identify the risks involved in how you trade, you’ll be able to consider which insurance policies could help in those situations.
You could also contact other similar businesses and ask them which they would recommend. Asking someone who has been in the craft business for a while can be a huge help.
Whilst not a legal requirement on the crafter’s side, many craft events will not take on businesses with no insurance. The risk is too great if a member of the public was to be injured as a result of the craft. It can also prove very costly to bypass such insurance – so much so that it can spell the end of a business.
You do not need insurance to sell your crafts online but some policies are worth considering. You should think about taking out cyber insurance when you are holding sensitive data.