Jewelry Business Insurance

How Not To Lose
Your Home-Based Jewelry Business

© by Christy Perry; all rights reserved

Christy Perry, jewelry artist and insurance executive

Do you need home jewelry business insurance?

About three out of every ten people are operating some sort of home business, according to the U.S. Bureau of Labor Statistics - but a typical homeowners policy does not cover a home-based business.

You need coverage for your business property and for liability.

So how do you get the right coverage for your jewelry business, without spending all of your profits on insurance?

I spent fifteen years in product management for three different insurance companies, before I left to start my own agency. At the most recent company, I was involved in a project to implement an endorsement to our homeowners policy to cover a home-based business (see Option 1 below).

I am also a jewelry-making addict, and my hobby has expanded into a small home-based business.

As an insurance executive, I understand the risks and the need for adequate protection. But my business was small! It was only generating a profit of a few hundred dollars a year, and I didn't want to have to spend the entire profit on insurance.

I was okay with taking the risk of losing my beads if I had a fire. (I could have a lot of fun shopping for the replacements!)

But I worried about liability, and I knew that my homeowners policy would not cover me.

My jewelry business is set up as a limited liability company, but that might not be enough. What if my "lead-free" pewter turned out to contain lead after all? What if one of my necklaces broke, and my customer's toddler ate some crystals? The thought of a liability lawsuit kept me awake at night.

Depending on your type of business and your insurance company, there are typically three policy options for a home-based business. Keep in mind that policies vary from company to company, and from state to state, so you should consult with your local agent to determine exactly what coverage you need and what adjustments you might need to make.

(Note that this article is only about the property and liability policy. If you use your car primarily for business, or the car is owned by the business, or if you have employees, you probably have additional needs to discuss with your agent.)

A homeowners policy by itself does not cover a home-based business. Depending on your type of business and your insurance company, however, one way to get the right coverage is by adding an endorsement to your homeowners policy to cover your home business.

• This coverage is usually fairly inexpensive, but it is usually fairly limited. Coverage might cost less than $50 per year.
• It might increase the amount of coverage for your business personal property, and might provide coverage for bodily injury or property damage.
• It probably won't include products liability or professional liability.

This option might be best for a small in-home retail business. There are many companies that rely on independent reps to sell their products through in-home parties. One example might be someone who sells another company's jewelry, but does not make her own jewelry. Her computer and her samples stored in her home office would be covered, and she would have liability protection if customer in her home for a jewelry party falls and is hurt.

Think of this as the "in-between policy." Some businesses need more coverage than a homeowners policy can provide, but not too much. There are companies who sell a special commercial policy designed specifically for in-home businesses.

• It is a business policy, so it is designed for the unique risks that businesses face, such as products liability.
• However, it is designed for a home business, so it does not cover the house itself - the dwelling is already covered by the homeowners policy.
• Depending on your options, your coverage might cost less than $200 per year and up.

This makes it a good fit for a small in-home studio or workshop. It is usually more expensive than endorsing the homeowners policy (described above), but it is much more affordable than a full-fledged business owner's policy.

This option might be good for someone who makes her own jewelry and sells it at home, by mail-order, on the web, or at craft fairs. Some cities require the business to show proof of liability coverage (sometimes with the city named as an additional named insured) to be allowed to participate in a craft fair in the city.

Be aware that this is a specialized product, and not all companies offer it.

Eventually a business reaches a point where it needs broader, deeper coverage. A business owner's policy (BOP) provides higher amounts of coverage than an in-home business policy, and it can also cover the building itself, if necessary.

This option might be good for a jewelry business that has moved into its own quarters, either a workshop in the backyard, or a location entirely away from the home. It would also be a better choice for a business with employees.

Although the coverage is more expensive than the other options - probably several hundred to several thousand dollars per year - it is the most appropriate way to protect a business. You have worked hard to build your jewelry business to this point. Don't risk losing it by refusing to buy the right kind of coverage.

So which option - or even another option - is right for you?

The answer is, "It depends." I have the second option (an in-home business policy) for my jewelry business, and I have the third option (a business owner's policy) for my insurance agency.

Each case is different, so please don't rely only on an article like this, or any other article on the Web. By their very nature, articles don't know who you are or what you need. Also, coverage varies from company to company and from state to state.

The best thing you can do is to sit down with your insurance agent and review your risks and your needs. The two of you can find the right balance between more coverage and less money.

Also remember that you might have other jewelry business insurance needs. Auto insurance is a subject in itself, as are workers compensation, professional liability, and others.

Your business is one of your biggest assets, so you need to protect it properly. More importantly, it's your dream.

If your policy can't be adjusted to get the coverage you need, consider shopping for a different company. And if your agent can't answer your questions, consider shopping for a different agent. This type of consultation is the agent's job. It's why you pay him/her! Don't you deserve to have your business properly protected?

Author Christy Perry of Community Insurance Center, LLC owns an insurance agency and a home-based jewelry business. She sells her jewelry through booths at craft malls, fairs, home parties, and direct sales.

She lives with her family in Dublin, Ohio, where all of her jewelry customers are well protected, and all of her insurance clients are well-accessorized.

She had about fifteen years of product management experience before she opened her agency, and because of her background, she focuses on annual protection reviews with her customers, helping them to find what their policies cover and what is excluded.

For more information about the types of things you should discuss with your agent in your next annual protection review, please visit her web site at Community Insurance Center, LLC.

Note from Rena: I highly recommend this fun article, also by Christy Perry: Homeowners Insurance and The Spiderwick Chronicles.

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