Do I need insurance to sell handmade crafts in the UK?
Handmade crafts are big business in the UK. According to the Crafts Council, the value of the industry has increased from £883m in 2006 to over £3b in 2020. And the beauty of it is, almost anyone can start their own crafts business.
Thanks to advances in technology and the rise in popularity of so-called side hustles, there has never been a better time to start a business and sell your handmade crafts. However, if you do this, where do you stand when it comes to insurance?
In this guide, we take a look at the risks small craft businesses regularly face. From those who sell exclusively online to others that sell at craft fairs or out of their own shop, we also look at what - if any - insurance handmade craft businesses need to purchase. So, if you’re thinking of setting up your own craft side hustle, carry on reading for all you need to know about small business cover.
What are the risks involved with running a craft business?
No matter what craft you specialise in, the fact is, accidents happen in business. These are known as business risks. In order to decide what level of insurance you'd like your craft business to have, it’s important to understand what these risks look like. Below we take a look at some of the most common risks involved in running both online craft businesses and craft stalls.
There are a number of risks associated with online craft businesses. These can typically be split into two areas - internal risks and external risks. Internal risks include events such as break-ins, fires or floods at your home or workshop that sees stock and materials stolen or ruined. When running an online business, the possibility of cybercrime and data breaches also poses a risk. That’s why many online retailers consider taking out specialist cyber insurance.
External risks, on the other hand, are events that negatively affect third party individuals or their property. For example, if a customer demands financial compensation after one of your handmade products causes injury or illness. These risks can also be extended to employees. This is to say, if your online business employs staff, and they become ill or injured while at work, they could make a claim against you. This is another major risk you will need to consider covering your business against. As we will discuss below, if you have employees, having cover in place isa legal requirement.
Craft fairs and stalls
Stall-based businesses face all the same risks as online craft businesses. However, when it comes to accidents involving third parties and their property, these risks tend to be heightened. This is because when running a physical stall, interactions with the public are far more common. For example, if a customer trips over a cable when walking around your stall and injures themselves, they could have a claim against you. The same is also true if they injure themselves or an item of their personal property is damaged when at your stall.
Types of insurance for craft businesses
In many cases, there is no legal requirement to have business insurance in place when running a crafts business. The only exception to this is if you have employees working for you. As is the case with all businesses, if you do hire staff, UK law requires you to have employers’ liability insurance. This insurance will financially protect you should an employee have an accident or fall ill while working.
Although other forms of insurance are not compulsory, this doesn’t mean they are not worth having. On the contrary, should an accident happen, the right financial protection could be the difference between you going out of business or not. Below we look at four types of insurance all craft businesses can benefit from having.
Public and product liability insurance
Public and product liability insurance covers your craft business against claims of accidental injury or property damage caused by your business. Depending on your policy, this can cover both accidents at the workplace, as well as injury, illness or damage caused by one of your products. For example, if one of your products injures or makes a customer unwell, and they make a claim, this cover will protect you. This could be anything from a handmade soap product reacting badly with a customer’s skin to a faulty candle product damaging a customer’s table or carpet.
Do you need public and product liability insurance for a craft stall?
As touched on above, you do not legally require public and product liability insurance to sell at a craft stall. However, it is a good idea. If, for example, a member of the public trips over your stall and becomes injured, this cover will protect you. Similarly, if a product sold at your stall is faulty and damages a customer’s property, public liability insurance will pay the legal costs that result from any legal action taken against your business.
Employers' liability insurance
If your business hires any staff - be that permanent, part-time, apprentice or volunteer - employers' liability insurance is essential. By law, you must have this cover. This is as much for your business’ benefit as it is for your employees’. This is because employers’ liability insurance will protect you if something happens to an employee while they’re working for you. This could include a physical injury or a work-related illness.. In either of these cases, employers' liability insurance will help you pay all legal fees and any compensation that may be awarded to the employee.
Tools and equipment insurance
Once again, tools and equipment insurance is not a legal requirement for craft businesses. However, it can save you a lot of money and keep your business trading in the event vital tools or equipment are lost, stolen or damaged. As an industry that relies on manufacturing, if you are without essential tools or equipment for even a short period of time, the consequences could be devastating.
For example, if you sell handmade wooden toys and your carpentry tools are lost or stolen, you may not be able to continue to manufacture new products. In this event, tools and equipment insurance may be able to pay for replacement tools to get you trading again. In some cases, these policies will even provide financial compensation for any loss of earnings for the period of time you are unable to work. If you are a small business, this could be the difference between going under or being able to continue to trade.
At Markel Direct, we provide specialist craft business insurance packages. These allow you to combine a number of policies together that best suits your needs.
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