In the Natural Skincare Makers Australia group, there's often questions about the very important topic of insurance.
So I asked Bec Innes from AUZi Insurance to answer some of the most frequently asked questions for you.
Read what Bec 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 soap and candle makers, which also includes other bath and body products.
We always tell our customers for this policy to check with your current home insurer to ensure they will cover you for manufacturing at home or conducting any form of business from home as many insurers will not cover it.
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. If you’re involved in training you can take out Professional Indemnity and then there’s 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, depended 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 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. Once you have an ABN is when things usually start to get serious.
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, and a Public and Products Liability policy is generally an ‘Occurrence Based Wording’ which means you need to have the cover in place when the injury or damage occurred.
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 understand you and the industry, e.g. who knows what ‘cold process’ is and doesn’t call it ‘cold pressed’. If you’re a soap maker, make sure they know what saponification means, what curing means and all the other elements of making soap. Make sure they know who NICNAS is, what they do and when any changes are going to be made.
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 with 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 NICNAS, 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 more specific information on our application such as your insurance history, claims, convictions etc and we also ask whether you do any other activities.
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 Wordings 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 cover.
What happens if a customer makes a claim?
This is not always a straight forward 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 will pass this information onto 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?
I have been working at AUZi for two-and-a-smidge years now and my role from day one has involved bath and body businesses including candles. My job was to understand what these customers do to enable us to tailor make a policy suited for the majority and be able to give a point of contact for insurance. I wanted to ensure that I knew exactly what bath and body businesses did so I have been to a soap making class, I communicate with potential customers and makers every day and I stay on top of regulations where I can.
I research every item that our Soaps and Candles Policy covers – which also includes a range of bath and body products – so I know what goes into making the items and what the potential risks could be for that item.
How can people contact you for more information or a quote?
You can call me on 1300 939 698 or email email@example.com.
Or see what we do here: https://www.auzi.com/portal/soap-candles-insurance/