Private Label Products

Believe it or not, many businesses assume products liability without ever realizing it. Product liability is the responsibility a business assumes for any property damage or injury their product may cause. On the surface, one would think that only a manufacturing company would have this exposure. But that simply isn't true.

I was just in a small salon the other day that had their own line of hair dyes and hair products. The salon owner thought it really made his business look top notch to have their very own line of hair dye, but he got much more than just a label with his personalized dyes.

I asked him if they were standard colors, or if he had a hand in making them. I think it started to hit him, he really did manufacture something. He told me that a representative came out from the manufacturer, sat down with him and helped him customize everything. From the base, to the dyes, he picked it. It was the same for all the other hair products too. That's just how contract manufactures work. They make products at your specific direction. That way, if something goes wrong, all the responsibility rests on the creator of the formula. But the salon owner isn't a chemist, so how could he have known what was safe and what wasn't?

Well, 99% of the time, there are no problems. The contract manufacturer is going to use standard, well tested ingredients. But sometimes things do go wrong. If the products in his salon injured someone, the salon would be primarily responsible, because their label is on the goods. To top it off, the contract manufacturer was based in another country, making it even harder for them to share responsibility.

The principle holds true for many others, not just salons. Food stores with private label "store brands," paint shops, cleaning companies, electronics, even pharmacies. When you put your brand on a product, even if you don't make it yourself, you're responsible for it. So how do you mitigate this risk? Demand vendor's coverage from your contract manufacturer. This is a certificate that says they will defend you if anything goes wrong with the product and that they have specific insurance to back it up. If they won't give it to you, ask them why.

If need be, your own insurance may include products liability and may help protect your business. Be an informed business owner, and discuss it with your broker. Better yet, give me a call.

Do I need Wedding Insurance?

Now that it’s finally warm outside, its not just summer, its wedding season! As you prepare to walk down the aisle, you may have been told you need insurance for your wedding. Do you? After all, isn’t a wedding just a private event? What could you need insurance for?

Well, just to start, if you look hard enough there is someone willing to sell you insurance for just about anything. That doesn’t mean you need to buy it. There are three basic categories that come under the heading of “wedding insurance.” They are wedding liability insurance, wedding gift and jewelry coverage, and event cancelation insurance. While these all cover real things, you personally may not need some or all of them.

Two out of the three of these have elements included in your renters or homeowner’s insurance policy. Wedding liability insurance is a personal liability insurance policy that covers bodily injury and property damage including liquor liability, specifically for the event. It usually costs somewhere from $100-$300 depending on the size of the event. Well, all forms of homeowner’s insurance (including renters and condo) covers personal liability. Personal liability covers bodily injury and property damage that you cause while acting as a private citizen. (Of course there are limits to this, but getting married isn’t one of them and neither is liquor.) Personal liability insurance policies, however, generally cannot list other parties (like your venue) as additional insured, while a special event policy can. Your insurance agent can provide proof of coverage to the venue for you.

The most important thing to do is to make sure the parties covered for the homeowner’s policy are the parties getting married. In this case, it’s not a bad idea to add your spouse to your homeowner’s insurance before the actual wedding day. And, if it was the parents that signed the contracts to rent the venue, than it is their homeowner’s insurance covering the event.

At the very least, ask your venue if they will accept your homeowner’s insurance instead of a special policy – it can be a source of significant savings for something that you already have.

Wedding gift and jewelry coverage is strictly personal property insurance with more narrowly defined covered property. Your homeowner’s insurance provides coverage for your property anywhere, not just in your home. The issue here is sub-limits to covered property. When people think of what could happen to wedding gifts, they are mainly concerned with theft, theft of cash and checks. Actual physical gifts are mainly sent ahead of the wedding. Your homeowner’s insurance usually limits theft of cash to about $500. Weddings often involve more, much more. Some wedding gift policies can cover larger amounts of cash, but require that you estimate the amount beforehand, which presents its own challenge. A better solution might be giving all the cards in a lock box to a responsible member of the wedding party to be retrieved the after the event. If you are in a hotel, give the box to the front desk to put into the hotel safe.

Wedding policies also often cover wedding rings and jewelry. This is universally covered (but limited) on homeowners insurance. Since you will have your wedding jewelry forever, short term insurance doesn’t make much sense. Yes, it’s only a few dollars to add to the wedding insurance policy, but if you annualize that amount, it’s not a very good deal for the year. Fine jewelry should be placed on a jewelry floater, or rider on your homeowners insurance that specifically lists the items and values, and is supported by documentation if necessary.

This leaves us with wedding cancelation insurance. There is no equivalent homeowner’s coverage that you may already have. Event cancelation insurance pays you for your out of pocket expenses should your wedding be delayed or canceled due to a specified list of reasons (and yes “change of heart” can be a coverage trigger). It returns deposits lost to the travel, venue, caterer, photographer, band, limo, et cetera. Before purchasing this insurance, compare it to the refund policies of your individual vendors. If your venue will refund your deposit in case of severe weather such as a hurricane (or re-schedule for no additional cost) then why purchase what is basically a refund policy through insurance? This is an especially important consideration for “destination weddings” where severe weather can prevent travel.

The take away message of this is not that wedding insurance is never needed. Each couple should evaluate what they already have on their homeowner’s insurance and what they actually need. Best wishes to all the brides to be!

My business doesn’t own a car, why do I need auto insurance?

Many business owners think just because they don’t own a vehicle, they don’t have any exposure to auto liability. Often, even businesses that do not own a vehicle need auto insurance, specifically hired and non-owned auto insurance.

Any time an employee is driving a vehicle, even their own, on “company time” or for a business purpose, the employer is exposed to liability. This is due to vicarious liability, the concept that one can be responsible for the acts of another. This is commonly referred to as the master/servant rule or respondent superior “let the master answer.” Because of this rule, employers are often responsible for the actions of their employees, even when the employer did not direct them to do something. If the employee drives their personal vehicle for a business purpose and is responsible for damage, the business is just as responsible. Cases are even more clear cut if the employee was in a vehicle rented primarily for business. For instance, when the employee is attending a conference and rents a vehicle.

The answer to this is hired and non owned auto insurance. For most small businesses, the insurance carrier writing the package policy or the “BOP” business owner’s policy, is happy to include the coverage. Most of the time, hired and non owned auto liability insurance is only a few hundred dollars per year, and is a worthwhile addition to your insurance program.