It can be difficult to sustain the high-intensity competition in the market when you are a small cosmetic company! Cosmetics is one industry where there is no shortage of big players and colossal brands. So, for small cosmetic companies, every business step has to be a calculative one. The risks are diverse and endless in business operation and cosmetic manufacturing. It can be a business liability-related risk or product-related. To combat the possible risks, you have to find the right business insurance that suits your needs.
The necessity of business insurance for cosmetic companies
Does a small cosmetic company need insurance? Yes. Whether you run an international company or a local one, insurance can be your ultimate savior when things go wrong! Especially for the cosmetic industry, the risks can be dangerous and cause businesses to shut down. As the cosmetic business is entirely product-dependent, the business owner has to be extra careful.
The possible risks and threats in the business are of a different kind. The business insurance you purchase for your small cosmetic company can serve beneficial for the owner, employees, and business asset. Besides offering the employees a group Mediclaim coverage as a corporate benefit, you should consider other insurance plans. As a business owner or retailer, you can go for tailor-made business insurance policies or buy more than one type of business policy to meet the requirements.
Top 3 business insurance policies for Cosmetic Businesses
- General liability insurance, which helps protect your business from claims of bodily injury and property damage.
- Commercial property insurance, for help covering business’ property whether it’s owned, leased or rented, stock and contents. The property insurance also should include Business interruption insurance, to help pay lost income if there is an interruption in business due to a fire or allied related loss
Business insurance features – At par with the industrial needs.
If you are the owner of a cosmetic company or in charge of purchasing a business policy that meets the company’s needs, the following pointers in discussion will be useful for you.
Here you can find the noteworthy features of the business insurance and essential coverage aspects. Knowing the important aspects will help you in the selection process, so you can enquire about the relevant coverage regulations and benefits with the insurance seller.
- Coverage for products
As you know, a cosmetic business depends on two things – the products they manufacture and on marketing. Business insurance covering product damage and product liability is vital for a cosmetic company. If your product causes any damage to the user, they can file a lawsuit against the company. The product liability policy works as financial support in such cases and comes to aid. They offer coverage for legal expenses.
- Example – Suppose you produce sunscreen lotion with UV protection. But the composition of the lotion is unsuitable for people with acne-prone skin. The cream may stimulate the growth of acne. In such cases, the customer can legally charge you and bring allegations against your company’s reputation. Having Product Liability Insurance will protect you from financial losses. It covers the legal expense and reduces the financial loss.
- Coverage for manufacturing unit
The warehouse or manufacturing factory determines if your business can operate at the optimal rate. If there are any issues on the industrial front, your cosmetic product gets damaged. Factory insurance under business policies covers the losses and damages to the produced cosmetic and machinery.
- Example – Suppose there was mishandling in the production unit, causing damage to the cosmetics and production. The Factory/Warehouse Insurance will cover the losses incurred due to damage and property destruction. You will get all-inclusive coverage for – building damage, machinery, raw and produced stocks, spare parts, tools, etc.
- Coverage for employee liability
Business insurances not only cater to the needs of the business owner but also meets the requirement for the employees during a crisis (caused due to the business). Small cosmetic companies can never omit the risks of accidental causes in the production line. Manufacturing cosmetics in the factory needs chemical processing, increasing the chances of fatal accidents and life-threatening injuries to the employees. Workmen compensation insurance is a type of business insurance that helps the employer to pay for the compensation and legal suits during such unfortunate events. Thus, while browsing the different business insurances for your cosmetic company, remember to check this coverage aspect.
- Example – Suppose an employee expired while working in the production unit for an accident. With the Workmen Compensation Policy, you can meet your responsibility as an employer. The policy will provide compensation to the employee’s family under the provisions of the Workmen Compensation Act 1923 and Fatal Accidents Act 1855. You do not have to pay on behalf of the company in such cases to meet the liability.
- Coverage for accidents
Fire accidents are common for cosmetic production units. Companies rely on warehouse facilities and machinery to ensure optimal production. An unfortunate accident like a fire breakout can damage the whole setup and may lead to a company shut down. Other causes for the accidents may be – electrical faults, explosions, etc. In any such unforeseen incidents, the machinery and employees get badly affected. Business insurance covering the expenses for such damage-generated losses can be a savior to the small company. Small to medium cosmetic companies necessitate this coverage the most to avoid the chances of a sudden business shutdown.
- Example – If the manufacturing resources in the company got devastated in an accidental fire, a small cosmetic company can get into major troubles and financial losses. It can also lead to a company shutdown. With Fire Insurance coverage, you can recover the cost of re-installing the machinery and restarting the production.
- Coverage for product complaints
Understand this coverage aspect with an example to recognize the requirement. Suppose you have launched a skin-based cosmetic product in the market. If the chemical composition of the product proves harmful for the skin for a section of users, they can file a legal case against your company. The malicious chemical composition can be a strong legal ground to sue a company. In such times, small businesses find it difficult to overcome the business interruption and meet the additional compensation costs. Having business insurance like product recall insurance helps in covering the company. It is a crucial pointer that you must not ignore while discussing the coverage regulations of the various business insurances.
- Example – Suppose a batch of your produced face cream was affected by malicious product tampering, bringing legal allegations against your brand. The contamination was unintentional, for which, you will get qualified for insurance coverage. The Product Recall Insurance will provide you with monetary support to moderate the possible losses.
- Coverage for shipment flaws
Cosmetics companies need to have a well-planned shipment process through which they can ship their products to B2B or B2C operations. But there can be mishandling incidents during the process. If your product badge gets damaged during the loading of the cargo, then who will bear the loss? Small enterprises have a hard time covering such unforeseen expenses. Business insurance that offers carrier legal liability coverage is your ultimate rescuer in this case. Check the coverage regulations to include such benefits by considering every possible business risk.
- Example – If a batch of cosmetics gets broken while transferring it from one city to another, the company does not have to bear the loss. The Carrier Legal Liability insurance will manage the expenses and pay for loss recovery.
- Coverage for staff
The employees working for the cosmetic company are responsible for the production pace and capacity. So, it is crucial to offer them insurance coverage for health expenses. Group healthcare policies and group personal accident coverage insurances are suitable for such requirements. With the group healthcare policy, small business companies can manage the requirements in a budget. The policy covers the medical expenses of the employee and their families (if included) within an affordable premium. As cosmetic production is associated with chemical processing, the chances of accidents are high. The group accident insurance provides financial coverage for accidents for the employees.
- Example – If an employee gets injured while working with the chemicals used in producing cosmetics, the group personal accident policy will cover the expenses for treatment. The company can be free of any allegations and charges as the insurance company will manage the financial aspects.
A comprehensive business insurance plan under your budget
Small cosmetic companies need to figure out the budget to ensure a comprehensive business insurance package. An insurance broker having more than one insurance offering can bring you a compact solution or multiple business insurances to manage your needs. As the company owner, you have to discuss the possible business threats with your estimated budget to ensure the best deal. Find an insurance broker that can bring the best policy under your budget.
PlanCover – Rely on the best.
PlanCover, the top-rated insurance broker company, brings you a range of business insurance policies that meet the expectation and pocket. With the insurance experts in the market, you get tailor-made policies for your small business. Get in touch with PlanCover to get a plan that ensures zero financial obstacles during any unwanted business interruption.