Company insurance is intended to safeguard the financial assets of a business owner and is a vital investment for an Etsy entrepreneur.
This post will discuss the most important insurance coverage for Etsy entrepreneurs, general liability insurance, as well as additional policies that are appropriate for this company.
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Etsy Sellers Need General Liability Insurance
Every firm, regardless of sector, has risks that should be insured. General liability insurance is the most frequent and comprehensive form of coverage that company owners purchase.
General liability insurance covers the following risks:
Physical harm
Damage to property
Medical expenses
Legal defence and decision
Personal and commercial harm
While general liability insurance is not legally needed for companies, operating without it is exceedingly dangerous. If your company is sued, you might face costs in the hundreds of thousands of dollars (or more). The only way to avoid this sort of catastrophe from destroying your organisation is to have an adequate general liability insurance coverage in place to assist pay for these losses.
GENERAL LIABILITY INSURANCE MAY COVER COMMON SITUATIONS FOR AN ETSY ENTREPRENEUR
Example 1: A prospective investor in your art company stumbles, fractures his arm, and chooses to sue while visiting your studio. General liability insurance would cover the cost of an attorney to defend your company as well as any needed payment.
Example 2: You lose control of the dolly while transporting a sculpture to a customer’s automobile, and it bangs into the car. The customer’s car repair expenses would be covered by general liability insurance.
Example 3: Another Etsy merchant sues your company for defamation. While you’re not sure why this seller believes you libelled him, you should engage a lawyer right away to safeguard your interests. Your legal bills would be covered by general liability insurance.
Of course, this is not an entire list of risks covered by a general liability insurance policy, and certain situations may result in a specific peril not being covered. To minimise coverage gaps, it’s always better to speak with your agent about the terms of your policy.
General Liability Insurance Cost
Etsy businesses in the United States typically pay between $400 and $1500 every year for $1 million in general liability coverage.
The cost of your coverage will be determined by a number of variables. Among them are your
Location
Deductible
Employees’ number
Per-occurrence restriction
The overall aggregate limit
You may be able to get general liability insurance at a lower cost if you buy it as part of a business owner’s policy (BOP) rather than as a separate policy. A business interruption policy (BOP) is a more complete option that covers numerous types of coverage, such as business interruption and property insurance.
Other Types of Coverage Required by Etsy Entrepreneurs
While general liability insurance is the most crucial, there are various different types of coverage to be aware of. Other forms of insurance that all Etsy sellers should purchase are as follows:
Insurance for Product Liability
While you put your best effort into the things you sell on Etsy, there is always the possibility that someone could claim your product harmed them. In the case of a lawsuit, your legal expenses and any needed settlement would be covered by product liability insurance.
Insurance for Commercial Property
You put a lot of money into the goods and equipment you utilise to manufacture your products. Commercial property insurance would cover the expense of repairing or replacing your business-related property in the case of a fire, theft, or natural catastrophe. This comprises your company’s equipment, supplies, and inventory.
Coverage Options for Some Etsy Entrepreneurs
In addition to the insurance listed above, your Etsy company may need other forms of coverage based on key parts of your activities. Some of them may not apply to you, so be sure to ask your agent whether policies are appropriate for your company.
Insurance for Home-Based Businesses
If you operate your company from home, you may need this insurance to protect your equipment and the area in your house dedicated to your business. If you do not declare that you use your house for business reasons, a conventional homeowners insurance policy may not cover business-related products or client accidents in your workshop.
Umbrella Insurance for Businesses
While most claims are covered by your general liability insurance policy, certain incidents or lawsuits may be so severe that they threaten to deplete the limits of your main coverage. Commercial umbrella insurance protects you from having to pay for legal expenses and awarded damages that exceed the limits of your main policy out of pocket.
Additional Security Measures for Your Company
Although investing in company insurance is simple (and necessary), it should not be your first line of defence. Yes, insurance will reimburse your company for cash losses incurred as a result of an occurrence, but it is much preferable to avoid losses altogether.
With this in mind, here are a few steps you can take to better secure your company:
Make use of legally binding contracts and other business agreements. (We provide free templates for several of the most often used legal forms.)
To safeguard your personal assets, form a limited liability company (LLC) or a corporation. (To discover how to incorporate an LLC or company in your state, see our step-by-step tutorials.)
Keep your company licences up to date.
Streamline the internal procedures of your company. This will eliminate unneeded variables from routine activities and establish a secure, consistent environment in which to do business.
If your company is an LLC, you should check into LLC insurance.