TKD Woodworking – Liability Insurance

Is getting close to the time when I want to start trying to sell my product online via Etsy, Ebay, etc. In order to protect myself and the financial assets I have as an individual, I’ve done a couple of things:

  1. Created an LLC – TKD woodworking. The idea is to create a “Limited Liability Company” and sell through this vs. selling as myself. It will provide some protection of my personal assets, provided there is no “gross negligence” involved
  2. Created a separate checking account for running the business, with a separate credit card for charging items. Since I do not mix my personal and professional assets, it will provide a little more of a shield against a lawyer “piercing the veil” and getting at my personal finances
  3. Purchased Liability Insurance, charged to the company (TKD Woodworking). In this case, I went through my regular insurance company (USAA) and though they do not insure small companies, they connected me with the Hartford Co. which does.

For the insurance company, they had a good idea of what I was trying to do (small craft company, selling online) and had some interesting questions to ask before providing me a quote:

  • Was I making furniture, or just small items (cutting boards, boxes, etc.) – I assume furniture would mean more liability
  • Was I making anything with stairs, ladders, etc. – again more liability
  • Was I making anything specifically for children (toys, etc.)

There was a host of other questions on the product the business would be producing. All of these items point to additional liability issues which I would need to consider if I chose to move my business in that direction.

In the end, with an assumed sales of roughly $2,000/year, a $1M liability policy is going to cost me $458.78/year. While that may seem a little steep, it will help me sleep at night, knowing I’ve got some protection for my personal assets.

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Mr. 39 Months

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