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Insurance 101 for skincare, bath and body brands

by | Apr 2, 2020 | Insurance, Risk, Soap | 4 comments

I’m often asked about the very important topic of insurance.

So I asked Nicole Eldridge from AUZi Insurance to answer some of the most frequently asked questions for you.

Read what Nicole has to say below.

Is insurance necessary for small businesses, and if so, why?

Insurance is not compulsory but we always recommend taking out Public and Product Liability Insurance. Why? Because ANYTHING can go wrong in the course of your business and without insurance you literally have everything to lose.

What types of insurance should bath and body businesses have?

There are various types of insurance to consider when starting any new business. Public and Products Liability is definitely an important purchase to consider and from our experience should be at the top of your list. We specialise in Public and Products Liability Insurance for cosmetic manufacturers and soap and candle makers. This policy includes a large range of bath and body products. You can see the full list here.

We always tell our customers to check with their current home insurer to ensure they will cover you for conducting any form of business from home including manufacturing at home as many insurers are not comfortable with this.

A General Insurance Broker can then help you with other lines of Insurance such as Fire, Theft, Contents, Business Interruption, Money, Machinery Breakdown, Equipment Cover, etc. and/or workshops you will want to look into Professional Indemnity Insurance also. At AUZi we also have a Soap and Candle Workshop policy that includes both Liability and Professional Indemnity Insurance. Now there is also Income Protection or Life insurance too. There are so many covers to choose from including some I haven’t mentioned – BUT this is something we don’t currently offer, so please seek advice from a General Insurance Broker.

Is insurance expensive?

The cost of insurance varies, depending on a number of different factors. Insurance is one of those costs that we all don’t necessarily like paying for, but when you don’t have the cover and everything you own is on the line it puts things into perspective. Having a claim brought against you can send you bankrupt just from legal fees alone.

A few hundred dollars a year as opposed to a few hundred thousand or more if something went wrong definitely makes it a worthwhile purchase.

When is the best time to get insurance?

Preferably when you start doing anything in conjunction with your business and are ready to trade.

Insurance should always be part of a business plan because some people have wonderful ideas for a business and either can’t get insurance or cannot afford to pay for the insurance.

A lot of people don’t understand that anything to do with the business has potential to cause injury or damage to someone, even including simple tasks such as picking up supplies and going to the Post Office.

Another huge thing to consider is keeping your insurance running even if you decide to take a little break or if you look to wind down the business. The risk doesn’t necessarily cease once you close the business when you still have products in circulation and being used by customers. Products Liability generally needs to be in place at the time of the claim, not solely at the time of purchase.

Is it better to go direct to an insurance company or through a broker?

This is really a personal choice. As long as you are confident and comfortable that you have the right cover in place then go with your gut feel. The industry is heavily regulated so it is always in our best interest to do the best we can for you.

Brokers like myself who specialise in niche areas such as bath and body products will always understand your risk to its full extent and will work tirelessly to make sure that you are covered. We also reach out to our mentors and communicate with the wider Insurance world so that we can offer the product we do.

Cover your business with someone who understands you and the industry. Make sure they know who AICIS is and what they do. Also, make sure you are reviewing the exclusions placed on policies. A common exclusion we have been seeing on liability is excluding Errors in Formula or Design. If this is on your policy or quote, make sure you ask about it and have a full understanding of what this actually means for you and your business.

Cover your business with someone who constantly reaches out to the wider community to ensure that they are doing all they can to provide you with information and tools to help your business.

What kind of information needs to be provided to the insurer when getting a quote?

With AUZi we ask a few questions only to give you the quote as we have tailored our website to give you a lot of information prior to getting a quote.

For example, we ask what limit you require, what state you trade in and do you comply with AICIS, ACCC, etc and voila you have a quote. You can then go on to purchase with us online in a matter of minutes.

We do ask for more specific information on our application such as your insurance history, claims, convictions etc. and we also ask whether you do any other activities. All of our policies are pre-made and all the hard work is already done. Whereas if you approached a General Insurance Broker, they will require a lot more information from you including a full list of all products, ingredients, labelling etc.

Do products need to have batch numbers to be covered by insurance?

Insurers will always refer back to the law and standards, their Guidelines and Policy wording when it comes to any occupation or industry. Different insurers will have different requirements, conditions, exclusions and Policy wording so it is always good to ask the question.

Batching and keeping records is good quality control in any circumstance so it is definitely a good business practice to have regardless of whether it is the law or not. Some insurers may have this as a requirement under the policy in case a product recall is required due to contamination.

Without checking and rigorous testing you could be voiding your insurance coverage.

What happens if a customer makes a claim?

This is not always a straightforward process. If you sell an item and that item has potentially caused damage or injury then that person will come to you looking for damages.

If this happens, NEVER admit liability and advise you to pass this information on to your Insurer. We then engage the Insurer and request information and they then compile everything they need including evidence and proof and determine if liability is afforded under the policy.

This is essentially why you take our Public and Products Liability, so that if someone does make a claim against you, you can breathe easy knowing the cover is in place to protect you.

This is another benefit of having a Broker, they will assist you with claim and can act as a buffer between you and the insurer.

What experience do you / AUZi have with bath and body businesses?

AUZi prides itself on delivering insurance differently. As we specialise in Liability and Professional Indemnity for set niches. This gives us the opportunity to research, and delve deep into each occupation. We speak with experts (like Jen), in each field, and we speak with our customers, insurers, and regulators in order to be ahead of the game. We understand, not only what goes into your products, but how you run your business. Plus we are also a small business (our insurer Berkley – they’re the big guys).

How can people contact you for more information or a quote?

Contact AUZi on 1300 939 698. Or see what we do here.

Or feel free to email us at mail@auzi.com and our social links are below;
Instagram – @auziauziauzi
Facebook – AUZi Insurance

Insurance is one of the many things to consider when you’re starting a skincare brand. Check out my Skincare Business Starter Guide for more tips on how to start building your own wildly successful skincare brand.

Jen x

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4 Comments

  1. Kate

    Great article! Thank you.

    Reply
  2. Lee navarro

    Hi there, just found your website. I would love to know what kind of insurance I will need to facilitate a DIY workshop, eg: make your own body scrub. I live in WA, am a qualified beauty therapist and would like to incorporate skin education in my program or offer a coaching service.

    Reply
    • Jennifer - Skincare Business Foundations

      Hi Lee! I’m not qualified to provide insurance advice – best to speak to an insurance broker or insurance company for that, however I’d say apart from Public Liability you’d also likely need Professional Indemnity! Definitely recommend chatting to a broker or insurer though 🙂
      Hope that helps!
      Jen

      Reply

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Jennifer Rudd Skincare Business Foundations 28

Hi, I'm Jen

Founder of Skincare Business Foundations, I help skincare and beauty founders build compliant and ethical brands that last.

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