Please enjoy this replay from our Jan 7th, 2021 live event with commercial insurance broker Jack Wong of Reframe Insurance.
Want access to more live masterclasses and content for Canadian makers? Learn more about our Makers Blueprint community!
Contact Jack Wong
Disclaimer: This transcript was auto-generated using AI-powered software. Please excuse any typos or grammatical errors.
Jess: Welcome everybody.
We'll just wait for everybody to pop on here. And we have Jack here as well.
Jess: Posting in the chatbox. Just let us know maybe where you're, where you're tuning in from. Let me be kind of fun. And Jack, I made you the host there, So, you should build to share your screen whenever you're ready.
Jack: Okay. How do I do that?
Jess: I think that's along the bottom maybe.
Jack: Okay. Yeah. I see a share screen, So, I should be able to do that. Okay, great. So, I will.
Jess: Let me get that setup. I can do maybe a little introduction and everything to get everybody's logged on. Yeah, I can see that. Perfect.
Jess: Okay. Welcome, everybody.
Thanks for hopping on here. Live with us. So, if you don't know me, my name is Jess. I'm the owner of lilac and Clover, and I'll be hosting everybody here today. A little bit of housekeeping. If you guys can keep your mics muted, that ends up being a lot better for the recording and doesn't interrupt us as we're going through the presentation.
You can write down any questions that you have and just save them for the end. And Jack will be doing a little bit of a Q and a then for us. , and yeah, we are recording it. As I said, we'll be posting it on our website probably later this week. , if we can get it all done by then. So, if you miss something or if you need to leave early or anything like that, you can always rewatch it then.
And yeah, let's just hop right into the presentation here. So, today we have Jack with us, he's a commercial insurance broker with reframe insurance out of Vancouver. He works with small businesses, just like us, to find the best insurance for us, whether that be home business, anything like that. And today he'll be taking us through a little bit about the different types of insurances for us as small business owners.
So, whether that's a commercial liability, home insurance, kind of all that, and how that's all together. So, thanks for being here with us today, Jack, and you can take it away from here.
Jack: Yeah. Thanks, Jessica. And thanks for the opportunity to come and chat with you guys today and just share a little bit about, yeah, home insurance, business insurance, and, pretty much everything in between. So, and you, you, you know, this type of business, So, you guys are in an interesting spot, that's just right in the middle.
So, there are just some different considerations that hopefully, uh, we'll go into today and yeah, we don't come out of this just with a clearer picture and, just an understanding of how-to, get getting, get your small bit home-based business insured. So, kind of quick table of contents here. , start off with the introduction.
We'll try to go through that quickly, and really the kind of meat of it is the last couple of sessions, just around risk analysis, risk management, common types of business insurance.
How are you going to get insured? Because if you've tried, I'm sure you've run into you. Might've run into different kinds of barriers with underwriters and with your advisor. And then also, just a quick, buyer's guide that I'll be sharing. So, without further ado introductions. So, really with, with reframe, we're, we're I-Corps,
So, it's a really kind of mission-driven organization. , our mission really is to help people thrive today and protect tomorrow. , and So, we're trying to, essentially redefine the insurance industry, with radical transparency and accountability.
So, one of the things we do and not a lot of other advisors do is we are actually fully transparent with all our commissions and we'll we make, So, you know exactly what we're making, and where we're getting it from. , So, about us. , yeah, we live by a shared belief that what we do makes a difference, and really the goal is health, wealth, and wellness for people in our community.
As we try to take a really kind of unique approach to insurance and be really, really creative, around coming up with solutions for our clients, great story, you know, uh, Antonio is the founder, started off kind of offering, like wellness and different workplace, programs for that.
And, you know, quickly found there was a gap in the employment of his face. So, he started there, and then we all kind of joined, added little pieces to the business. So, I joined to add the commercial insurance piece and we just kind of built out that way over time. she was quite a little timeline back in 2015. Uh, we got the B Corp certification in 2017 and then on was an affordance I joined the last year 2019. Well, I guess not last year anyway, it's 2021.
So, two years ago, to kind of add the commercial insurance piece and So, on and So, forth. So, we've added team members since then. We're about a team of seven. Now,
Jess: Jack, your audio kind of jumping in and out a little bit. I don't know if it's the way you're moving your hands over your mic on your computer, maybe.
Jack: Okay. I will keep my hands away from my computer. I will talk a little bit louder and uh, yeah, if that happens again, let me know, we'll figure something out.
Jess: Yeah, that's much better. Thank you
Jack: So, core values, five hunger, accountability, Maverick, uh, interesting core values we all came up with as a team. So, really part of those. , and yet here's the team there's, there's six on this picture, but there's actually seven of us but yeah, a little bit about me, commercial insurance advisors since 2013, work with a ton of different companies. I have, you know, clients that are publicly traded and they have like the six-figure premise for the insurance policies all the way down to small startup law firms been fortunate enough to be recognized,
In 2016, I also, do a lot of writing for different sharing, my, my knowledge where I can. , So, what's this presentation about, the goal is really to give you a better understanding of the insurance requirements for insuring a home based business. I guess you might run into how to overcome So, me of those barriers and really just how to paint a really good where you're if your advisor whether that's me,
Jess: I just have to interrupt again. Can you guy all mute your mics? I think we're having a bit of overlap from somebody that doesn't have their mic muted or Jack if you can mute everybody. I don't know.
Jack: Let me see if I can do that conversation.
Jess: Yeah. Just a little bit over,
Jack: Let's see how, if I can be with this, just do you know how I might be able to do that?
Jess: it'll be under if you can see participants, I'm not sure it might be at the top of your screen now that you're presenting, or if you change the back to host, I can do that as well. Yeah,
Jack: Here. Okay. Here we go. All right. So, I'm basically just forced me to everybody how that, uh, works and we'll see, yeah. So, the goal of the presentation is to just help you guys understand how to paint the story with your advisor, to the underwriter, because when they first hear about a home-based business, you know, whether it's soaps or candles, they have a lot of kind of preconceived notions in their mind about what you might be doing. So, to hear about.
So, they might be thinking, you know, they're very risk-averse. We might be thinking about, Oh, you're dealing with chemicals lie. You're heating things up in big pots. Like these are things that kind of scary to them, right. Especially if it's not, you know, in a commercial setting with like a lot of expertise and, you know, safety features and all that stuff.
So, they have that idea in their mind. And so, if you want to get coverage or get coverage at a reasonable rate or coverage at all, it's just very important for you to be able to paint that picture and, you know, reframe, uh, the way that you're thinking about it.
So, you know, it looks better. So, that's really the goal of the presentation, because there's a lot of things that are very specific to different situations.
I can't really go into that without knowing more about, you know, you in your home, where you live, who your current insurance company is and all that, but these are just in general, things that help you, number one, get insured and number two, do it at a, at a somewhat reasonable rate. So, you know, it's not like So, expensive, it's not worth it. Right,
So, when you're talking about a home-based business, especially for, you know, it could be, you're doing crafts at home, right. Maybe making a little jewelry. So, candles, that kind of stuff is a couple of like risk factors that immediately pops into an underwriter's mind. , the first thing of course is hazardous chemicals.
You know, you're dealing with a lie, are you dealing with, you know, acids perhaps and different things like that, that they're going to be concerned about, pollution, right?
They don't want you to be spilling this stuff in the backyard. It goes into your neighbor's property. And all of a sudden there's an issue, right. could be product liability as well, whether somebody has allergic reactions, you know, to the soaps or whatever,
Product liability also extends to the packaging material that you use. So, just kind of be wary about that, how you not only the product itself but how you package it, for, for delivery and for sale. the third kind of risk factor they might look at is the inexperience of the operators.
So, when it comes to business insurance, one of the things they'll look at is how much experience, the people behind it have.
And so, they would want to know what kind of training you have, whether you have experience in the space, how many years. So, if you can kind of have a good story behind that, that helps a lot. the fourth thing to consider is operations liability. So, that's just liability for the types of operations that you're doing.
So, whether you're melting stuff, you're pouring things and, you know, that's all, you know, if you're using a hot plate, for example, he based processes that have the risk of fire and that's something that they aren't concerned about.
The other thing to consider also is a product recall. Now, if you're shooting a ton of products and you discover maybe there's some contamination or something wrong with the particular batch, you might need to recall it. which can be, uh, very, very expensive.
I have a client that I just started working with and they had a product we call to claim, obviously, they're a much bigger business, but it was like $400,000 us or something. So, it was just an insane amount. So, something to consider and something underwriters will be considered as well, when they are kind of evaluating, uh, your proposal for insurance,
So, risk management. So, I mentioned a bunch of things that, underwriters might be looking at and would be concerned about. So, how can we sort of address each of those things, point by point, with your advisor. So, on the, on the topic of hazardous chemicals like ly or assets that you might be using, the best thing to do obviously is trying not to use those, the simpler and kinder of, you know, environmentally friendly and, and, efficient your processes, the better it's going to be your answer.
So, try not to use lies or those different things. you know, you, somebody else, if you do happen to have those types of chemicals and that's part of the process and it's inevitable, number one, you want to make sure that they're being stored properly.
So, we'll communicate that to your underwriter, say, if I have essential oils or whatever, with alcohol in it, they might be flammable just, Hey, I'm storing them in a fireproof cabinet. It's away from open flames, right? even better send a picture, send them a picture of where you're storing it. You know, I'm starting to, in this cabinet, it's in my garage, it's not next to the hot water tank, right.
There's no kind of heat in the area. So, you know, sending pictures and, make sure you clean up your garage before you send the picture because it is nice and clean, you know, everything sparkly, then it looks good. They're like, okay, this person has good housekeeping, good maintenance, and they're likely to be lower risks. Right.
Also, ensure the quantities you keep are minimal. So, don't stock up a whole bunch of stuff just cause you know, it's cheap and you're going to get it, get it in bulk. Right, buy it in small quantities, that way there's less risk and make sure you communicate that with your advisor to the underwriter as well.
When it comes to product liability, perhaps there's some contamination in the product, allergic reactions or something, make sure you label the stuff properly, make sure you have a good warning label, make sure you list all of the ingredients on the product, and packaging, uh, and or your website or however you're selling or distributing that product.
Make sure you're sourcing your raw materials from reputable sources, right. Don't go and buy it from some guy out of the back of some guy's van, right. That's not what you want to do. You want to get it from like an actual store or website, you know, with some real, a real kind of reputation behind it. Right.
And better yet, if you could get a copy of, of your supplier’s insurance policy, just So, you know that they're insured in there they've been vetted and they're legitimate, right, if required, you might also, want to get your government certifications and approvals, that way, again, your product's been vetted and, uh, you know, they know it's safe.
The third kind of risk factor for a home-based business is the experience of the operators. So, if you have any relevant industry experience or education, such as some of the education you've, you've probably done with Jess, that's going to be good to be able to kind of communicate that.
And, if it's, you know, a child or somebody below the age of majority, that's kind of, it's their first business, right? It's their first foray into the business world. , you know, make sure you communicate to the underwriter that there is some adult supervision involved and you know they're, they're there to kind of supervise the process and make sure it's all safe and everything, operations liability.
Again, you want to demonstrate proper experience in the field if you have it and also, ensure that any high-risk processes if you're, you know, dealing heating on metals, you're melting wax, make sure that's all done under supervision.
So, for example, you're not leaving a hot plate with some stuff boiling, you know, for a couple of hours and you're, you know, in the house baking, right. Make sure you're there supervising. So, if anything goes wrong, you know, you're there with the fire extinguisher and you can, you can handle it before it gets out of hand. Right?
So, again, just make sure you communicate all of these things to the underwriter, through your advisor, let them know, Hey, the same, these are the steps we're taking to make sure it's safe and we're doing it properly. when it comes to a product recall, you know, make sure you have some kind of quality control process, right? again, label your stuff properly with all the ingredients and everything, the source, you're on materials from a reputable vendor.
And also, if there's any certifications or approvals that you need, make sure you get those, for heat-based processes, the risk management steps are very similar to hazardous chemicals, try to avoid them where possible. , if you do have to do it, make sure the heat is kept at a mini.
So, the lowest temperature you could possibly get away with, and then don't heat, anything unintended or overnight, make sure you're there monitoring it as if it takes 30 minutes, just sit there for 30 minutes, you know, bring them over with you, a cup of coffee, just be there. So, if anything happens, you know, you're there to kind of address, it before it gets unhappy.
So, now we're really talking about common types of commercial insurance and what you might need for a home-based business. So, there are really two types. You have liability insurance on one side and then property insurance on the other side, liability insurance basically ensures any liability arising out of your business operations or your products.
So, if you are, you know, in the garage, you're now melting, before a batch of soap, let's say, and you burned down your garage and you call your neighbor’s house on fire.
So, that would be liability insurance that would pay for your neighbor's house. Your property insurance would pay for your house. So, there are various forms of liability insurance that exists.
Do you have hairs, animations, umbrella, liability directors, and officers, even there's a whole bunch, with this type of business, the main concern obviously is going to be product liability and operations as well because you're going to be, you know, using heat or different things.
Perhaps, product liability is typically insured under a CGL commercial general liability insurance policy, which pays not only for, any kind of damages you might be liable for such as burning down your neighbor's house, but it'll also, pay for the cost of your legal defense, which is oftentimes, can actually be more expensive than the damages themselves. So, very useful and very necessary insurance policy.
It comes to your property insurance, basically insurance, your business, a property against losses, right? So, that could be for this type of business, could be things like molds that you use to shave the bars, hot plates, raw materials that you're sourcing or just different types of equipment, could even be just so, parts that you have in inventory that you're waiting to get shut down property insurance policies might also, provide that all-important product we call coverage.
We talked about it, but it's not necessarily for all types of businesses, right? If you're looking at a soap making business, for example, or a candle making business, you might have some rules, Pilates, some raw materials, and maybe some minimal stock, you know, that might not be enough to.
Warrant an insurance policy. If it's a couple thousand dollars’ worth of stuff, you might just be better off just not insuring it, you know, cause it's going to be too expensive for the price, there are other types of insurance as well. There's like cyber business, interruption, keepers, and insurance, but for a small business, typically that's not really necessary if you have an online store though, and you do have some customer information.
Cyber could be something good to look at and it scales depending on the pricing size scales if any of the number of records and the number of customers that you have. So, it's really, it can be, it can be quite reasonable. It can be three to $500 a year,
For example. So, what are some ways to get insured?
So, home-based business, you've got two ways to do it. You can either talk to your current home insurance company and have it added as a home-based business endorsement, or you can get a standalone commercial policy. So, there are pros and cons to each. And we'll sort of talk about that.
So, when, it comes to a standalone insurance policy, you're basically purchasing a separate policy for the business, which is separate from your home insurance policy, because it's a separate policy, you know, there's separate admin costs and things like that. It's going to be more costly than just simply getting it endorsed or added to your home insurance., but it offers more complete coverage in most cases.
And what I consider the most important thing is it's separate from your home insurance. So, this is a claim under your home insurance. It doesn't affect how much you're paying for your business insurance. If there's anything from the business insurance, vice versa, it's not going to affect how much you pay for your home insurance. So, the results and the outcomes are separate, which, you know, is an advantage, if something was to happen,
The second way is to just simply add it to your home insurance policy. So, you would do is essentially call your home insurance company and say, Hey, you know, I'm starting this new business., this is what I'm doing. You know, obviously follow their mismanagement and, and the stuff that I've discussed above to kind of, present the risk in a palatable way.
And you can just get an adage, your home insurance, a couple of problems there, it is cheaper in most cases, which is good, the sort of downside is not all insurance companies would offer that meaning you might need to switch home insurance companies.
So, you know, price increases. And you know, if you have loyalty or you like your current home insurance company, you know, you might have to switch So, something to consider, If they do offer this coverage, you know, they're going to Jack up the rates on your home insurance as well. So, it might cost more than getting a standalone plus home insurance. It really depends.
It also might only offer limited coverage. So, for example, they might only give you on premises liability. So, it'll give you insurance coverage. If you were to burn down your neighbor's while you were kind of making the song, but it might not cover things like your product and you know,
So, that's a huge kind of gap, but again, it varies. and the major downside here, in my opinion, is the results are attached to your home insurance policy. So, if you have a claim on either one, the premise is going up next year for both policies.
So, pros and cons, just something to think about your best bet probably are to talk to your advisor, get a code for both, and then you can kind of make that decision once you have both options.
So, Meyer's guidance. So, a lot of the stuff is very similar to what we discussed previously but basically, the job of the insurance company and the underwriter is to manage risk.
So, you and your via your, your advisor really need to around together to kind of present and to tell a really good story, to convince the writers that this is a safe and high-quality risk. Otherwise, you're either going to just not get coverage or you're going to have to pay So, much.
So, when your kind of presenting this risk, uh, to the underwriters, with your advisor, talk about your risk management procedures, right? And I've outlined some of the examples about you know, tell them that, you know,
Tell them how you're storing the stuff, send them the photos of your work area ratios, and that is clean as well.
And just make sure you just communicate that properly, when you're getting like utility insurance, one of the questions they're going to ask you is, well, what are your projected revenues for? What are your revenues from last year? So, just ensure that they're reasonable and realistic, but they're high enough to appeal to the underwriters.
You know, if you say, Oh, well, my revenues are going to be, Oh, I'm going to make a thousand dollars a year, right? That might not be kind of juicy enough, right? Because if your meat it, if you're earning a thousand dollars a year in revenue, how much are they going to charge you?
You know, realistically using the rating system, it might work out to be $10 a year, you know, in that case, that's not worth the time from their perspective. And So, they're not even going to look at it right.
However, if it's too high, you're going to pay for more than you actually need. So, balance is key, and just be realistic about it. If you're in a super early stage and you don't really know, you know, you're doing.
A hundred last couple hundred dollars in sales a month. That's great. That's a really good start. , but it might not be at the stage of your business where insurance makes sense.
I think you want to look at, is just do a price comparison between getting it added to your existing home insurance policy versus getting a standalone insurance policy. In most cases, I would recommend getting a standalone policy, for the main reason, as I said, it separates the results,
So, you don't really affect the other. but even that you might still need to make an adjustment to your home insurance provider. So, then would just automatically say no, if they know a business on site. So, just something to think about, different adjustments you have to make. There's a lot of moving parts to this, unfortunately,
So, but it's just how it is. You work with an advisor, they'll kind of walk you through it and, you know, hopefully, you'll be able to kind of get coverage at a reasonable rate, uh, with some of these kinds of tips.
So, if you have any other questions, obviously we'll take them out., but if something comes up later on and you need to get in touch with me, that's my email, uh, website., So, feel free to reach out to, with any question, we actually went through this much faster than I expected.
I'm going to kind of, we've had some time I'm gonna, unmute everybody and kind of just open the floor to questions. and yeah, I can help. So, one second here. Okay. So, I think I've allowed people to unmute themselves. So, if you have questions on mute yourself and, uh, yeah, I'll be here.
Jess: Perfect. Thank you, Jack, so, much, for all that information, super helpful, if you guys do have a question maybe just post, like, just say me or question or something, and we can pull you on, I'm here to ask anything that you have questions about. Okay.
Collete: I have a question. Yeah, go ahead. Hi, Jack. a couple of things, you mentioned it may not actually be worthwhile depending on what your profits are in your first few years, to obtain insurance legally as a soap maker. Do I need to start out with insurance? That's my question. And who, if, if it's not worthwhile, who do I go to to find that out.
Jack: Legally? no, you don't need to have insurance, to start if you want to find out whether it's worthwhile, get in touch with your advisor, you know, send me an email or if you have an existing advisor you're working with, reach out to them and, and just say, Hey, you know, here's this business that I'm doing or I'm contemplating, here's how much I think I'm going to do in revenue in a year.
And you know, ask them for a quote or ask them for their opinion on whether it's worthwhile. yeah, because you know, for a small, depending on the size of your business, I guess if you got a standalone policy, it could be on the order of probably less than a thousand dollars a year. , but you know, if you're just starting out, you don't really know, might not be worth it. So,
just wait a year, see what the results are and then, go from there. But once you get to a certain size and you're going to retail stores, you might require insurance as part of the vendor contract. But, yeah, I mean, legally speaking, you know, it's not like mandatory legally speaking.
Collete: And the other question is, with the standalone option, if my home insurance does not allow me the protection, if there's an accident, when I making soap, uh, would, would, could I keep that policy or do I need to have a home insurance policy that, covers my home and my business basically like, is my, would my home insurance be void if I made, So, there was an accident, but I have my standalone policy. Does that make sense? Yeah.
Jack: A lot of home insurance companies, won't like it, if you have a home-based business, right. So, if they know about that, they might choose to get off risk. They might say, Hey, you know, thanks for being a customer, uh, I'm not comfortable with a home-based business please go somewhere else. That might happen, that being said, you know, if you have a standalone policy and O insurance policy, what would happen if, if you know, you were in your garage, you were melting.
Some soap actually burned down the house, right? Your business's liability insurance would pay for the damages to your home. So, you actually need to use your home insurance policy. Okay. Yeah. That being said, if you do have business operations on-site, you in most cases have the duty to, tell them, and if they don't like it, then you're, you're, you're going to have to switch to another insurance company. That's just the way it is.
Collete: Thank you.
Jack: No problem.
Jess: Someone was asking if we can share the slide deck. Is that okay with you?
Jack: Sure. Yeah. I'll export a PDF version and Jess I'll email it to you and you can, yeah. You can share it with your, uh, with your audience.
Jess: Okay. Thank you.
Speaker 4: Hey Jack, so, are you saying, like if you only have home insurance and you're operating a business and just like collect, collect said that something happened while you were mixing or cooking, you're, uh, preparing your soap. So, does it mean that your home insurance will not pay for whatever damages that happened to your house and to the other houses? Just in case something burnt?
Jack: Yeah. So, your home insurance would not pay for that and you know, it's not anything bad, it's just, they don't pay for it because your home insurance insures your home and also, your personal liability. Right. So, if you were, for example, to go into a store and accidentally knock over a vase, your home insurance company would pay for that.
Right. But if you were, you know, making some soap and accidentally burned down the house and your neighbor's house, that legal responsibility would not fall under, like you personally fall under your business, right. Your business is the one that's technically responsible for that. And So, your business insurance would be the one that pays. So, it's not that you don't get paid. It's just which policy is paying.
Speaker 4: Thank you.
Collete: I have another question, Jack. What about, as a hobbyist soap maker? like my, my insurance company has said they won't, they, they don't allow, any, any business to be run from the home. So, making whatever included, but as a hobbyist for myself, I have been operating under the assumption that I'm okay.
Jack: It depends if you're doing it as a hobbyist. So, I, as an amateur, it's like amateur sports versus professional sports. Right. If you're just making it to give us cancer, to share with friends and stuff, that's no problem. Right. That's a cause that's not a business. It's like, you're, you're an amateur athlete for example.
Right, but if you're selling it and you've got sorry, and you've got like a website and you've got these different things and you know, you're actually earning money from it, then all of a sudden, you're a professional athlete and that's a different kind of story.
Collete: Yeah. Yeah.
Jack: It really depends on how much you're actually making in terms of revenue. Like if you're doing it for, you know, like a hobbyist, you're giving them away. Yeah. Okay. Maybe you sell some, you know, in most cases, the home insurance company is going to be okay with it. , it just really depends on how extensive, and how, how big the operation is. We've switched home insurance companies to one that is, kind of more friendly to that type of thing.
Collete: Okay. Thank you.
Jess: There's a couple of questions in the chatbox. You can see them where else I can read them to you
Jack: I will. Yeah. Let me, So, does the business insurance cover liability if there's any reaction, et cetera, to the customer and the customer wanted legal action? Yes. It would your business insurance, if you got a commercial general liability policy, it would cover product liability. So, that's, you know, yeah. If a customer has a reaction or, you know, something with the product we wanted to see you, it wouldn't be covered. Does this apply to Ontario? Yes. The general principles will apply to Ontario.
Is this insurance including the products also? Yes. Your liability, your business liability insurance policy would include product liability. So, if someone used it got sick, your business insurance liability insurance would cover that.
Here's another question if, I mean products in my home and sometimes in a family, member's home is my family member required to have a certain kind of home insurance or business insurance to,
Yeah, you could, if you had a business insurance policy, you could have two locations on there. So, one is your place like your garage, for example, and the other, being your family member's home.
And you can just add that to your business insurance policy, but their home insurance might react differently to that depending on what they have. So, my advice here is to keep it in one location, just to avoid any kind of issues between different insurance companies, if possible If you're renting a basement apartment for your parents, do they need to tell insurance? they would need to tell them that you are renting.
So, they would need to, it depends the house on how old you are, if you're, I believe under 21 and you live in the same household as your parents, even if you are technically paying rent, it would be, you would be covered under their policy. Your company is just in Vancouver or the whole of Canada.
So, we're, we're based in Vancouver, but we're licensed to do business and to advise people across Canada, does business issues apply to Etsy and et cetera? Uh, yes it does. So, at CN and stuff is just from my understanding, like, like a marketplace, right. So, it's a way to distribute your product.
So, yes, it would apply to that as well the businesses don't really care how you're distributing the products, whether you're, you know, knocking on people's doors or going into stores or selling Amazon online, it's all good. Do you ensure a comeback? I don't directly, but I know someone who does, So, if you need help, let me know. I can, I can send over the, uh, their information.
Speaker 5: Can I ask, I don't know if it's a question or if it's just clarification that I'm trying to find out. Yeah. Do you mind if it’s felt like it's a bit of a weird one? So, I make perfect mostly, not alcohol-based cause I wanted to avoid all the problems. However, I'm looking at introducing that and so, alcohol is a problem.
So, uh, obviously I would have to look at the fireproof cabinet and this and that, as it stands right now, let's just pretend that that doesn't exist and I'm making oil-based perfume.
So, there's no heat or anything required there are perfume materials, but, and, and I have a website, but I'm selling mostly to my friends, people who know me. So, I'm not doing a lot in sales. I'm not even, I'm not even really registered. I'm not registered as a business cause I'm waiting to see if that's even worthwhile.
So, my question is when it comes to home insurance, if something were to happen, that wasn't a result of the fact that I'm doing this out of my home, but just something else. What my, what the would our insurance company have an issue with that?
Knowing that this stuff was on the present on the premises, even though it wasn't technically related to why the incident occurred.
Jack: Yeah. So, as a general rule, if you have any like warranties or any kind of conditions or rules within your insurance policy, So, let's say, for example, you know, you, if you have a monitored alarm in your house and you tell the insurance company, typically you can get a discount, right.
So, if you told them you had an alarm, a burglar alarm but you didn't, and then your house burned down for a completely different reason, you would still be covered because it's unrelated.
So, you're still good. But if they find out what they might not like, they're not going to be happy about it, but legally speaking, they would still cover that because it's unrelated.
Speaker 5: Okay, it's only because I, I have nothing against, getting registered and getting insurance. If it's a standalone sound, sounds good to me. It's just, I feel I'm in a, in a tough spot in the sense that, because you were mentioning in terms of revenues, you have to decide whether insurance is worth it and in terms of revenue, it isn't, but I don't feel comfortable not having insurance and I want my home to be protected
Jack: Yeah. Yeah. So, it's a balance, right? Like you have to look at, okay, first of all, you have to decide what your risk appetite is. Like how much risk am I willing to take? You know, if I'm only selling to friends, maybe I'll take the risk, you know, but I was selling online to strangers, I don't know, in Miami is not worth it.
Right, So, it's that, and then also, how much you can afford. Right. That's the other thing. So, you really have to balance those two and it's a super individual decision to make, I think. Okay.
Speaker 5: Okay. But it's given me really a lot to think about, So, thank you So, very much for all of that clarification. Yeah,
Jack: Yeah. No problem. And actually, you don't need to actually get registered and have like a corporation to get business insurance under your personal name, with a DBA. So, if you have a brand that you use, right, you can do that.
So, you can have Shauna DBA, Shauna's perfumery, for example, and you can get business insurance that way band especially if you're operating under an individual name or a trading name, you really should look at getting the insurance because then if there's any liability, it comes to you personally. Right.
Whereas if you have an incorporation, you know, you can only kind of go after the corporation and not your personal assets, right. Your home in different things.
Speaker 5: Yes. Well, thank you very much for adding that because that's that's the other big question is, do I incorporate just for the, for the protection?
Jack: Yeah, exactly. And even that comes with its own costs. Right. You have accounting every year, you have your registration costs and legal fees if you don't do it yourself. Right.
Speaker 5: Oh, I know all of that is kind of sounds like a nightmare to me. So, I mean, I want to do things the right way, but I want to do it when it's necessary and not be sitting on all kinds of expenses when I'm selling two things a year.
Jack: Yeah, exactly. And these, you know, the other thing about getting into liability insurance is, of course, it's important to make sure you're protected in your assets and protected. Right. So, you didn't lose your house over this. The other consideration also is just to make sure, like, make sure that the liability insurance is there to protect you.
Obviously, it's also, there to protect your clients. You know, like if something really does happen, you know, mistakes happen, you know, maybe there's some contamination, somebody does get sick. Like you want to make sure that you have insurance or your insurance company can pay them so, they can go to the doctor and they can get well, right. So, there are really two sides to it protects you, but also, protects your clients, your customers, right?
Speaker 5: Yeah. Yes. Yes. Well, So, I think we'll probably be talking soon offline.
Jack: Yeah. Well, I'm always open to chat, and yeah. I mean, to give you kind of my unvarnished, uh, thoughts and opinions on, on what to do so.
Speaker 5: Fantastic. Thank you. So, Oh yeah, yeah, absolutely. Thank you. I really appreciate it.
Jack: Okay. Question from Sue here, if you're selling products online on your own website, should you get your insurance as soon as you launch or as you said unless you are making a lot of revenue yeah, I think that question was sort of answered, when I was answering, uh, Shauna's question depends on your risk appetite.
It depends on your revenue, like whether you can afford it. And also, who you're selling to, if you're selling to strangers, you're more likely to run into problems than if you're selling to just your friends.
See, you know, the person here. So, to clarify, if an unrelated to the business accident happens in my home kitchen, fire, home insurance will have to cover it, even if I have a home-based business. And even if I have no business insurance.
Yes. If the loss is unrelated, to any kind of conditioner warranty that you have reached, they would still have to pay for that one. But they'll probably cancel you for next year because they're going to be happy about that.
You didn't tell them. Right. So, I'm not going to advocate that you don't tell them, right. You want to be transparent with the underwriter. You want to be honest, technically yes. If it's unrelated.
Oh, what would someone use proprietary? They can get sued personally. So, if I'm understanding the question correctly, you're saying that, So, you're, you're, you're asking a question about just liability and, you know, how to protect yourself with a corporation or something. Right.
So, not a lawyer, first of all, but, yeah, if you are operating a business under a personal name, So, you're a sole proprietor or something, and somebody was to sue you, they would sue you personally, right. Because you're the provider but if you had a company, let's say, you know, uh, Brenda's syllabary, limited and you were to be sued, they would Sue Brenda. So, pretty limited.
So, they would be able to get the assets of Brenda's slippery, which, you know, might be whatever you have in the bank or, you know, any kind of equipment that you have. So, they would not be able to get to you personally, in most cases, unless maybe there was a fraud or something silly that happened, but again, not a lawyer.
Speaker 6: Hello. Hello, Jack. Hello. How are you? Thank you very much. So, can I ask you a question? I read in the teaching that the basic payment, uh, for, for insurance for one year, uh, should be around $500. Am I wrong?
Jack: Well, that's a reasonable assumption. Yeah. That's a reasonable assumption depending on, the size of your business and what you do. Yeah. You're using them all estimate.
I would say like three to eight, depending on where you are for the standalone, commercial insurance obviously if you're bundling that in with your home insurance, it's going to be more expensive than that because now you're insuring the home and everything else
Speaker 6: And just product it's around 500. This is right.
Jack: Business liability insurance 500 a year is a, is a good ballpark. Yeah. Good. Thank you. Doing your budgeting and stuff. That's a good estimate to use until you figure out what it actually is.
And obviously, it depends on your revenue, right. If you're doing like a million dollars in sales and it's going to be way more than $500, but at that point, you don't mind.
Speaker 6: Yeah, exactly. If you get to that,
Jack: Exactly. You're making a, you know, suddenly a million dollars a year with of
Speaker 6: Well, why not paying more for insurance?
Jack: Exactly. So, it's like taxes. You kind of want to pay a little bit more because that means you're making money.
Jess: All right. Anybody else has any questions or maybe we'll wrap it up here and let Jack go, but he's locked his, uh, email address here, website everything's you guys can follow up with him there for sure. Cause as he said, a lot of these questions are going to be pretty specific to us and revenues and what we do and what we make. So, yeah. Let's maybe wrap it up there. Jack. Is there anything else you want to add?
Jack: Uh, no. I saw you Vaughn or raised her hand me. We'll do one more question. Any questions you've honored, I guess not hear me now. Oh yes. I can hear you.
Speaker 7: Hi, I have a question. I recently registered my business and I opened a business account and all that, but I wasn't, fully prepared. I'm still organizing stuff. I am getting some sales from my friends and I made a few deposits also, at the bank. Now my question is, do I need to have insurance? You know, things are still very young.
Jack: Yeah, do you need to have insurance? hard question to answer but you know, kind of give you a framework for thinking about it yeah. The first thing obviously is what you can afford. Right. If you can't afford it, then it's a non-starter right the second thing is how much risk are you willing to take?
You know, if you're selling to friends, you're probably safe, but right. Or safer, Sorry than selling to the general public people who don't know you. Right. In terms of like lawsuits and different things. Cause you know, if something happens to a friend, they'll just bring it to you.
They'll just say, Hey, you know, this happened, you know, they'll tell you, you can work it out. Right. I'm not going to lead with a legal letter. Okay.
Speaker 7: Okay. Also one more question we're operating from, the house technically is not in my name, but it's under my, my husband's name, would that affect his insurance in any way?
Jack: It would. Yeah, because then there's still a business operation on his premises, not the one operating it. There's still a business being operated there. So, you would still need to notify an insurance company. And they would probably want to know, you know, what type of business it is, who's operating it, et cetera. So, they would still want to know those same types of things that we discussed earlier on in one of the slides.
Speaker 7: Okay. Yeah. Okay. Thank you very much.
Speaker 6: I just remembered another question that I read also, that after registering with health, Canada, we should go for, uh, the insurance, right? That you, you need the, for insurance, uh, for company insurance, you need the first we, uh, is there in health Canada or no?
Jack: Yeah. They're going to want to know whether you have that registration in any kind of, you know, like I said, one of the slides you want to make sure you get your government approvals and you show that to the underwriter. Right. Make sure you show them, Hey, you know, I've got approved.
Like it's official, you know, we're not some random people like cooking in a pot in the garage. Right. Like it's, you know, it's vetted essentially. So, that'll really help you get your insurance. You might be able to get it without it, but probably not your 90 or second fail if you don't feel like getting insurance. sorry if you want to, if you don't have the health Canada certain So, justice, correct?
Collette: I have a question. Might be more for Jess. I haven't applied to health Canada yet for any of my soap. , recipes as such, do you need to have a company name first, or can it just be under my personal name? So, it's kind of like chicken and egg. Do I need the company name, then the County health Canada, then the insurance, or how does this unfold?
Jess: You can submit it with your personal name or if you're a sole proprietor, you could submit it like that. And then you can always go in and change it later if you did happen to incorporate or yeah,
Collette: Definitely. Okay. Good to know. Thank you. Yeah.
Jess: All right. Well thank you guys for all being on here super good questions that you guys were asking and yeah, thanks again, Jack, for being with us and you guys can feel free to follow up with him.
Jack: Okay. Yeah. I hope it was helpful guys. I'm here. You have my contact information if you need me, and yeah, I'll be circulating the slides, uh, through Jess, shortly.
Jess: Perfect. Sounds good. Yeah. And also, not an email to everybody with the slides and the replay and everything. So, yeah. Hope you guys have a great rest of your day and I'll talk to you all soon.
Thank you. Thank you So, much. Wonderful.
Bye. Thank you.
Want more helpful tips like these for your business? Join us inside the L&C Makers Tribe where we’re sharing business info, tips, and tricks, and creating a community in the Canadian maker’s space!