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What Types of Insurance Does a Candle Business Need?

What Types of Insurance Does a Candle Business Need?

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What Types of Insurance Does a Candle Business Need?

Candle Maker Business Insurance Quotes

Costs for business insurance can vary greatly, and getting insurance quotes from multiple companies is recommended in order to get the best pricing.

Coverwallet and Hiscox offer easy business insurance quotes at affordable prices.

What Types of Insurance Does a Candle Business Need?

Candles add ambiance and warmth to any space. Most candles are used in household settings as a decorative or religious element, and often, scents and oils are added, improving a room’s smell. As a result, candle-making businesses have endless variations that make the business profitable and open to a broad market.

Candle-making businesses need insurance to protect their finances from expensive liability lawsuits if an incident occurs. Therefore, well-rounded insurance is an essential aspect of a business plan and is needed to protect against risks.

Related: Guide to starting a candle making business

What Are Some Risks for a Candle Business?

Candle businesses are exposed to the following risks:

  • Fire damage
  • Extended closures and supply interruptions
  • Employee injuries
  • Equipment breakdown

Given the risks that candle businesses are exposed to, insuring the business’s various layers is important in preventing expensive claims and liabilities.

Fire Damage

The most significant risk for candle businesses is fire damage. Fires can cause costly damage to structures, equipment, supplies, and inventory. In addition, fires that lead to a shutdown increase the financial burden of the loss because production-flow interruptions mean a loss of revenue.

Faulty wiring, equipment malfunctions, sparks generated from friction on conveyors, and smoking are common fire causes. Further, candle businesses that use a laboratory or kitchen have additional ignition sources from Bunsen burners and kitchen appliances.

Candle businesses also have a substantial fire load, meaning many of the business’s items are likely to spread a fire. For example, inventory (candles and wicks), papers, furniture, and packaging supplies (paper and boxes) are flammable and promote a fast-spreading fire.

Other fire sources include heat-producing equipment, particularly when the equipment is unattended or ill-maintained. Thorough cleaning and maintenance procedures are essential in loss prevention, but insurance is equally necessary to help cover the resulting expenses if a fire does start.

Extended Closures and Supply Interruptions

Losses and interruptions that halt operations can produce a major financial loss for candle-making businesses. This risk is particularly costly if the disruption happens during the business’s peak season.

Closures following a loss happen from incidents like fires and equipment breakdown. When a loss renders the workspace unusable, the candle-making business needs to pause operations for repairs or temporarily relocate. Larger candle-making operations are challenged with finding a large enough space and replacing specialized equipment. Often, automated equipment is custom-built, so repairs and replacements take longer.

Supply interruptions from third-party suppliers are an added risk that slows or even halts business production. Secondary suppliers help alleviate lost revenue resulting from a supply interruption; however, some supply interruptions are widespread and affect multiple third-party suppliers.

Employee Injuries

Common injury claims result from slips, trips, and falls. Poorly maintained walkways and workspaces increase the risk of trip and fall injuries—especially as spilled wax makes the floors extra slippery. Production workers are at risk of personal injury while operating the candle-making machinery. Additionally, employees can be burned from hot candle wax and hot equipment, suffer nasal irritations from fumes, skin irritations from contact with materials, and suffer back strains or muscle injuries from repetitive movements.

Formal certificates or licensing are not usually required for production workers, and working with automated machinery puts employees at risk of injuries, including burns, cuts, or crushed limbs. However, thorough training and safety measures help prevent employee injuries.

Equipment Breakdown

Candle-making businesses regularly use a variety of automated equipment to make their candles. For example, vats heat the wax, and refrigeration cools candles into their molds. When one part of the automated machinery breaks down, it will likely affect other aspects of the candle-making operation. This disruption in the candle-making production risks a loss of revenue.

Equipment is vulnerable to breaking down from poor maintenance, faulty construction, or mechanical failure. In addition, the machinery depends on a constant supply of electricity. Should the generators or transformers fail, production stops.

What Types of Business Insurance Should a Candle Maker Consider?

Candle businesses have multiple layers of risk that can lead to financial harm if an expensive incident occurs. However, there are also various types of candle business insurance to consider:

  • Product liability insurance
  • Commercial property insurance
  • Business interruption insurance 
  • Workers’ compensation insurance 
  • Equipment breakdown insurance

Product Liability Insurance

Product liability insurance is perhaps the most important type of insurance for candle and soap makers as it protects a business from customer injuries that occur when using your product.

Product Liability coverage is an important type of insurance for candle makers as it can cover popping candle wicks that result in a fire in the customers’ home or broken glass on a candle holder that causes an injury.

Commercial Property Insurance

A property insurance policy is one of the core policies in a business owner’s policy, which also includes general liability insurance. A candle-making business will greatly benefit from a well-rounded property damage insurance policy to insure the structure and all business-owned equipment and property. this insurance can also protect the business while selling at craft fairs, craft shows, and farmer’s markets. A property insurance policy covers hazards such as:

  • Fire
  • Wind
  • Hail
  • Theft
  • Vandalism

A fire can be particularly damaging and result in extensive repairs to the structure and the equipment. A property insurance policy covers the rebuilding cost up to an agreed policy limit—adequate coverage limits on the policy are essential.

Like structure coverage, a property insurance policy also covers business-owned items such as equipment, furniture, inventory, and supplies. Like structure coverage, the policy insures items up to an agreed limit. In addition, the policy stipulates coverage for the items at their replacement cost or their actual cash value (a limit that subtracts depreciation from the item’s replacement cost).

Business Interruption Insurance

Business interruption insurance is another key policy for candle businesses. This policy offers financial coverage for expenses that arise during an extended closure or supply interruptions.

Business interruption coverage is initiated by a loss—such as fire or wind damage. Following a loss, business interruption covers expenses, including:

  • Employee wages
  • Regular payments on bills and loans
  • Coverage for the cost of a temporary relocation

In contrast, contingent business interruption coverage insures the loss when a business loses income from a supply-chain delay rather than a direct loss (i.e., fire). Typically, contingent business interruption coverage is added to business interruption coverage (in insurance terminology, the word for coverage added to another policy is a rider).

Workers’ Compensation Insurance

A workers’ compensation policy offers protection for employees injured at work. Candle businesses with employees benefit from a workers’ compensation policy because it protects employees and protects the business from potential lawsuits. For example, an employee who is burned by hot candle wax and cannot continue working until they are healed may sue the business for medical costs, lost wages, and legal fees.

However, a workers’ compensation policy will cover those expenses. In addition to lost wages and medical bills, a workers’ compensation policy also covers the cost of rehabilitation care, disability income, and funeral expenses.

Equipment Breakdown Insurance

Candle-making businesses likely have specialized and custom-built equipment. Property insurance covers business-owned equipment and assets from perils such as fire and theft; however, a property insurance policy does not cover mechanical failure or breakdown.

An equipment breakdown policy covers equipment repairs and replacements that result from a sudden breakdown or mechanical issue. Since equipment breakdown coverage and property insurance overlap, it is recommended to insure both policies with the same insurance company to avoid disputes over which company is responsible for covering a claim


Hiscox.com

How Much Does Insurance Cost for a Candle Business?

Given that each candle business has unique insurance needs, insurance costs vary from one company to the next. Therefore, insurance companies base the prices on tailored coverage that meets the business’s specific needs. For example, a candle business with a large warehouse, numerous employees, and custom-built equipment needs far greater insurance coverage than a candle business that operates out of rented space, has few or no employees, and has easy-to-replace equipment.

Insurance companies consider coverage limits and loss risk to determine a fair price. Several factors that insurance companies consider include:

  • The size and condition of business-owned structures and warehouses
  • The number of employees on the payroll
  • Fire safety and prevention strategies
  • The value of automated equipment—especially custom equipment
  • Any past or current lawsuits or insurance claims

Ideally, a single insurance company can bundle the different candle maker’s insurance policies, saving time and money. Nonetheless, it is valuable to get customized quotes from multiple companies to compare coverage amounts and pricing.

What Types of Insurance Does a Candle Business Need?

What Types of Insurance Does a Candle Business Need?

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