Candle Business Insurance Gaps Makers Often Miss

A candle business can start with a few jars on the kitchen counter and grow into shelves full of inventory, weekend markets, and wholesale orders. Soap businesses grow the same way, one curing rack at a time.

But having candle business insurance doesn’t mean everything you make, store or sell is covered.

Holiday markets and wholesale orders are picking up right now, so this is a good time to take a look. Here are three areas worth checking before your next busy season, plus five questions to ask before you sign anything.

Quick note: We’re makers, not insurance agents. This post is general info to help you ask better questions. Your insurance provider or a licensed agent can tell you exactly what your policy covers.

1. Product Liability vs General Liability for Candle and Soap Makers 

Two common types of business insurance are product liability and general liability. The names sound alike, but they cover different things.

• • Product Liability Helps with covered claims involving injuries or property damage caused by the products you make. For a candle maker, that could be a claim tied to a candle. For a soap maker, it could be a claim tied to a bar of soap or a body butter.
    
    

  • General Liability Helps with other business-related risks. A common example is a shopper tripping over your table leg at a market booth.
    

The U.S. Small Business Administration lists both in its overview of business insurance types. It’s a quick read if you want the basics in one place.

These two are often sold together, but don’t assume one automatically includes the other. Some policies list product liability as its own line, with its own limit.

Watch for products you added later

Most makers don’t sell the same lineup they started with. Maybe you began with container candles and later added wax melts, room sprays, reed diffusers, or soap.

If your policy was written around your first product list, the newer items might not be on it.

What to check: Ask your provider to confirm that every product you sell is covered. Include wax melts, soaps, room sprays, and anything you’ve added since buying your policy.

2. Does Homeowners Insurance Cover a Home Candle Business 

If you make products at home, your homeowners or renters insurance may have limits or exclusions for business property.

A typical homeowners policy provides only $2,500 of coverage for business equipment, according to the Insurance Information Institute.

As your business grows, that limit can become a bigger problem than you’d expect.

Think about what’s sitting in your workspace right now. Three 16 oz bottles each of Salted Muse, Golden Honey Praline and Hazy Vanilla, three of our best sellers this week, come to $369 at today’s prices. Add, for example, $200 in wax, $150 in jars, $1,000 in equipment and $1,500 in finished products, and you’re at $3,219.

That’s before counting packaging, labels, and shipping supplies. In that example, you’d already be past a $2,500 limit.

Business property insurance may help cover certain losses, depending on your policy. Some homeowners policies also offer an add-on, often called an endorsement, that raises the business property limit. The Insurance Information Institute walks through the main options, including add-ons, standalone home-based business policies, and a business owners policy (BOP).

How to add up what you actually have

Use what it would cost to replace each item today, not what you paid a year ago. Supply prices change.

• Raw supplies: wax, fragrance oils, wicks, jars, lye, oils and butters, colorants

• Equipment: pouring pitchers, scales, heat guns, melters, soap molds, label printers

• Finished products: everything curing, boxed, or packed for a market

• Packaging: boxes, labels, tissue, and shipping supplies

Maker tip: Take a quick video walk-through of your workspace every few months. If you ever need to file a claim, it helps show what you had and where it was stored.

What to check: Add up the current cost of replacing your inventory and equipment. Ask whether your coverage includes supplies stored at home, products taken to markets, and inventory in transit.

Also ask whether losses are paid at replacement cost or actual cash value. Actual cash value is a reduced amount based on age and condition, so an older melter or scale may pay out much less than a new one costs.

3. Insurance for Markets, Wholesale, and Local Delivery 

Selling through your website, setting up at markets, delivering local orders, and supplying retail shops can each come with different insurance needs.

Some markets and wholesale partners ask for proof of insurance, usually a certificate of insurance (COI). Others may require specific liability limits or ask to be listed as an “additional insured.”

Being listed as an additional insured means your policy can extend some protection to the market or shop if a claim ties back to your booth or products. Many market applications spell out the exact wording they need, so read the vendor packet before you request your certificate.

Some policies include blanket additional insured coverage, which handles these requests automatically. Others charge a fee each time you add a new market or store. That’s worth asking about before you book a full season of events.

Maker tip: Markets and shops may ask what’s in your products. Our oil pages link the SDS and IFRA certificate for that oil, so save them for every scent you sell.

Deliveries and your personal car

Using your personal vehicle for regular business deliveries may affect your auto coverage. Many personal auto policies limit or exclude business use, so a weekly local drop-off route could fall outside what your policy covers.

This plain-language guide from the Utah Insurance Department explains why it’s worth double-checking. Your own state’s insurance department will have similar info for where you live.

What to check: Give your provider a full list of where and how you sell. Include online orders, in-person events, wholesale accounts, and local deliveries.

Before Choosing Candle Business Insurance, Compare These Details

The monthly premium is only one part of the cost.

Two policies with similar prices can have very different coverage limits, deductibles, and exclusions.

For example, a $500 deductible versus a $2,500 deductible could mean a $2,000 difference in what you pay toward a covered loss, assuming the deductible applies.

5 questions to ask before you sign

1. Does this policy cover every product I currently sell?

2. Are my products covered at home, at markets, and during delivery?

3. What are the coverage limits and deductibles?

4. Which claims or situations are excluded?

5. When should I update my coverage as sales and inventory grow?

Get the answers in writing and keep them with your business records. An email from your provider works. Save it in the same folder as your policy so you can find it fast.

When To Review Your Policy

Insurance isn’t something to purchase once and forget about. Here are good times to pull up your policy and look again:

• You add a new product, like wax melts, room sprays, or soap

• You place a much bigger inventory order than usual

• You sign a wholesale agreement or start selling in a retail shop

• You book a new market or a holiday event series

• You move into a bigger workspace or rent a studio

• You start making local deliveries

A yearly reminder works too. The month your policy renews is an easy one to remember.

One Last Thing

Already insured? Pull up your policy this week and run it against the five questions above. Still comparing providers? Bookmark this post and keep it open when you request quotes. 

For more business tips for candle and soap makers, visit our Learning page or join our free Facebook maker community.