When Is The Right Time For Liability Insurance?

Business By augurey Updated 1 Nov 2011 , 3:22am by sleepiesaturn

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augurey Posted 17 Oct 2011 , 10:53pm
post #1 of 11

After researching OH laws, I intend to operate under Cottage Food Law for the time being. I'm not at an acceptable skill level that I'm really ready to openly sell -- seriously have a lot of decorating improvement to do (though my cakes (flavors) have improved a lot).

But, my thinking is that at the very least, if I can do something small/basic, I'm okay with selling under Cottage Food law. I've read countless times on here about having business liability insurance.

As I am making a cake for my boyfriend's cousin's football senior night dinner, I'd really want to look more into the business liability. His aunt has suggested that I put out cards with my information in case if someone is interested in the future. First the thought kind of terrifies me because I don't know if I'm really ready for that -- mainly because my skill level is not what I'm happy with.

At any rate, I'd like to be able to sell a few here and there at least to cover some of my costs as this is way too expensive for me to be doing free all the time.

So I called State Farm today about liability insurance (I already have two policies with them). The rep is starting my application tomorrow - she has already spoken with the underwriting department that they will insure me. She isn't 100% about what the annual cost is yet, but feels that it won't be more than $250-$350; so at the most, probably $30/month at the most, which I may likely be able to get a discount because of my two other policies with them.

After talking to my boyfriend about this, he responded with "Well, you better get selling then to cover this new cost". Which now makes me wonder if this isn't the right time to have proceeded with this as I'm not ready to full out advertise/sell. I just want this to back me up in the instances that someone is interested (and perhaps, after my upcoming cake, there will be).

So, I guess my question is, is it good to always have that liability insurance (even if not selling a lot at the moment -- My mom has only ever given me money for a cake, so I don't really count that for anything) or should this only be taken on when you know that you will have more than family/friends wanting to order (which will then cover the costs)?

10 replies
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Annabakescakes Posted 17 Oct 2011 , 11:21pm
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I agree that your skill level isn't up there with Ron Ben-Isreal or whatever, but I have seen much worse coming from an actual shop in Tennessee, lol. You are not bad at all, but your writing could really use work. A good way to practice it is to print off a cursive writing primer off the internet and just copy over it with icing. If you laminate it, of stick it in a clear folder you can practice over and over, and reuse the icing. Uuse the Wilton letter presses or cutters with Fondant (they are available at Su ga rC ra ft, in Hamilton) until you get better with it.

$30 a month, maybe less really isn't anything. If he is that up-tight (and rude IMHO) about it, then it sounds like he won't be very supportive. If you can sell 1 cake a month, you can get the money for the insurance.

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scp1127 Posted 18 Oct 2011 , 4:46am
post #3 of 11

The first cake can cost you your house, future income, savings, credit score... you get the picture. If you have any of these assets, protect them. The premium is low compared to most industries.

Just a note about State Farm: For only $25.00 for the whole year, I have $20,000 insurance on my equipment added to the policy. I think I pay $31.00 monthly total.

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augurey Posted 18 Oct 2011 , 4:08pm
post #4 of 11

Thanks Annabakescakes and scp1127.

Annabakescakes, Honestly I'd be happy to just do 1 or 2 a month for right now. As for writing, I avoid it like the plague... I've had my first Wilton class since my last writing attempt, and I know I need to practice it more. Maybe I'll try your suggestion of printing off cursive paper and whatnot. I do have some fondant cutters, which I've only used once, but I need to work on getting the fondant completely even and the right thickness.

This is just kind of where I want to start for now. 1 or 2 cakes/month would keep me happy until I can get better and feel more comfortable progressing.

Tbh, my boyfriend is actually very supportive... he's just rather clueless when it comes to this sort of thing. We got into an argument over pricing. Though he quickly changed his mind just seeing how much ingredients cost.

We talked more about it last night and it turns out that he thought I was getting more car insurance. After I explained in more detail of what it was (and that it would cost me more if someone were to get ill from a cake), he was like "absolutely get that. You shouldn't wait."

scp1127, To me, that's why I want to get it from the very beginning, even if I'm only planning on 1 a month (if I can) because I realize one cake can pretty much screw me if I don't cover myself. Your policy does not sound bad at all. I won't have more information until some point today as the rep was going to work on my application today. I know the rep said it wouldn't be too bad for me; and even if I had to pay a little more, I think it'd be worth it considering what could happen otherwise.

Thanks for the input. I feel better now about it; even more so now that my boyfriend fully understands the purpose of it.

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momma28 Posted 18 Oct 2011 , 4:16pm
post #5 of 11

Before you sell your first cake, period. It was the first thing i did once legal

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augurey Posted 19 Oct 2011 , 8:15pm
post #6 of 11

Well, as of yesterday I am insured, so I feel better.

Thanks for the input icon_smile.gif

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Annabakescakes Posted 20 Oct 2011 , 5:20am
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Originally Posted by augurey

Well, as of yesterday I am insured, so I feel better.

Thanks for the input icon_smile.gif

Congratulations! It is a weight off your back, even though it is one more bill!

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cakecoachonline Posted 22 Oct 2011 , 11:28pm
post #8 of 11

Should certainly be insured - and on recommendations on getting lettering better on cakes - a course in caligraphy works wonders. Mastering this skill seperately from cake decorating will mean that any future writing for your cake craft will not look just like all the other cakes which have cut out letters with a cutter - but give your cake the air of individuality - which the customers are paying for! Good luck.

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ajwonka Posted 23 Oct 2011 , 12:10am
post #9 of 11
Originally Posted by momma28

Before you sell your first cake, period. It was the first st thing i did once legal

Me too! Mine is $500/yr but nothing is worth a lawsuit!

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johnjessi Posted 30 Oct 2011 , 1:22am
post #10 of 11

The right time to commence a liability insurance coverage is actually BEFORE the newly-trained practitioner commences activity. The best time to acquire coverage is at the time of training, while still a student, when no previous event may affect future coverage. The risk has not been taken yet, and the coverage will ultimately be upon all future activities.

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sleepiesaturn Posted 1 Nov 2011 , 3:22am
post #11 of 11

Insurance should be the first step if you have any assets what so ever. You never know what could happen.

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