Insuring a balm business: what cover you need and what it will not pay
Product, public and stock cover explained with real premium ranges, the exclusions that catch cosmetic makers, and how product safety law and recalls fit around it.
A balm business carries two separate risks that people tend to merge into one. The first is that somebody is hurt by your product and claims against you, which is what insurance is for. The second is that a batch turns out to be wrong and has to come back off shelves, which insurance mostly does not pay for and which costs about as much as making the batch twice. This page covers what each policy actually responds to, what the exclusions do to a cosmetic maker in particular, and what a recall involves once the decision is made.
Combined public and product liability at £5 million runs roughly £90 to £200 a year for a small UK maker in 2026, inside an overall band of about £80 for £2 million to £400 for £10 million. Employers' liability at £5 million is compulsory from the day you have staff. The policy pays third party injury claims; it does not pay for the recall.
This page is orientation for a maker deciding what to buy. It is not legal advice, not a recommendation of any policy, and not a substitute for reading your own wording, which is the only document that decides what you are covered for. Amounts are indicative United Kingdom figures for 2026 and date quickly. Last checked 6 September 2026.
The four covers, and which of them you can be prosecuted for not having
Only one of these is compulsory, and it is not the one makers usually buy first.
| Cover | Responds to | Usual limit | Indicative annual premium | Compulsory |
|---|---|---|---|---|
| Product liability | Injury or property damage caused by a product you supplied | £2m to £10m | £80 to £400 combined with public liability | No, but stockists insist |
| Public liability | Injury or damage arising from your premises or activities, including a stall | £2m to £10m | Usually sold combined with the above | No, but organisers insist |
| Employers' liability | Injury or illness suffered by an employee | £5m minimum, £10m typical | £60 to £150 added to a small policy | Yes, by statute |
| Stock, equipment and interruption | Your own materials, tools and lost trading after a loss | Sum insured you declare | £40 to £200 depending on sums | No |
The three limits on offer, £2 million, £5 million and £10 million, are not a scale of how likely you are to be sued. They are the maximum the insurer will pay on a claim, and the price gap between them is small because claim frequency, not the limit, drives the premium. A single serious injury claim with care costs and loss of earnings reaches seven figures without difficulty, which is why £2 million is a false economy for a few tens of pounds saved. Where these premiums sit in a unit cost is covered in costing and pricing, and they belong in the year one budget alongside the safety report described in starting a balm business.
What product liability actually responds to
In the United Kingdom, Part I of the Consumer Protection Act 1987 imposes strict liability on the producer of a defective product. Strict means the claimant does not have to prove you were careless. They have to prove the product was defective, that it caused damage, and that you are a producer. A product is defective when its safety is "not such as persons generally are entitled to expect". Being careful, well intentioned and small is no defence.
Three details in the Act decide most real situations.
Who counts as the producer. The manufacturer is obviously one. So is anyone who puts their own name or trade mark on a product in a way that holds them out as the producer, and so is anyone who imports a product into the United Kingdom in the course of business. Buy a white label balm and stick your label on it, and you carry producer liability even though you never melted anything. Import bases from outside the UK and you carry it too, whatever the original manufacturer's paperwork says.
What counts as damage. Personal injury and death, and damage to private property above a threshold of £275. Damage to the product itself is expressly outside the Act, which is the legal root of a practical point: no liability policy replaces a bad batch for you.
How long it lasts. A claimant generally has three years from the damage, or from when they knew enough to bring a claim, and there is a ten year longstop running from the date the product was put into circulation. Ten years is why the retention periods in batch records are set where they are, and why a maker who stops trading should ask about run off cover rather than simply cancelling the policy. Many craft schemes are written on a claims made basis, meaning the policy that responds is the one in force when the claim is notified, not the one in force when you sold the tin. If yours is claims made, cancelling on the day you close the business leaves a decade of exposure with nothing behind it. Ask the broker in writing which basis applies.
Public liability and the certificate a market wants to see
Product liability is about the balm. Public liability is about everything else you do in front of the public: the gazebo that blows over, the customer who trips on your cable, the table that takes a chip out of a hall floor. At a market both are in play at once, which is why they are almost always sold as one combined policy.
Market organisers, craft fairs, schools, hospitals and council pitches ask for a certificate before they confirm a pitch, and the request is usually for £5 million public liability, sometimes £2 million for a small hall and £10 million for a council or a large event. The certificate has to show your trading name exactly as it appears on the booking, the limit of indemnity, and dates covering the event. Organisers reject certificates for boring reasons: a trading name that does not match, a policy expiring mid season, or a document that shows only product liability when the request was for public. Keep a current PDF on your phone, and check the expiry date before the fair season rather than during it. The rest of the stall logistics are in selling at markets and online.
Before you accept a pitch, read what the organiser requires you to hold rather than assuming £5 million covers it. Some events require the insurer to note the organiser as an interested party, and some require cover for demonstrations or samples, which a tester on the table counts as. All three are easier to arrange three weeks out than three days out.
Employers' liability, and who counts as an employee
The Employers' Liability (Compulsory Insurance) Act 1969 requires an employer carrying on business in Great Britain to insure against liability for injury or disease sustained by employees, for at least £5 million. Most insurers issue £10 million as standard because the difference costs them little. Enforcement is by the Health and Safety Executive, and the penalty for trading without cover can run to £2,500 for each day you are uninsured, with a further penalty for failing to produce the certificate when an inspector asks.
Two points catch small makers. The definition of employee is wider than payroll: someone you pay to help fill tins for a weekend, a student on a placement, or a friend you pay in product can all fall inside it, while a genuinely self employed contractor working under their own control usually does not. The line is a matter of fact rather than what the arrangement is called. And there are narrow exemptions, principally for a company whose only employee owns at least half the shares, and for a sole trader who employs only close family members, but they evaporate the moment you take on anyone else. The physical side of that responsibility, from hot melts to slip risks, sits in workshop setup.
The exclusions that catch cosmetic makers
Liability wordings are broadly similar. The exclusions are where policies differ, and a handful of them are aimed straight at what small cosmetic makers do.
| Exclusion or condition | What sets it off | What to do about it |
|---|---|---|
| Regulatory compliance condition | Selling without a safety assessment, notification or compliant label | Complete the assessment first, keep the certificate in the file |
| Medicinal and therapeutic claims | Marketing a balm as treating eczema, nappy rash, arthritis or a wound | Keep claims cosmetic, in the words as well as the intent |
| Sun protection | Any stated SPF, or an implied sun protection benefit | Do not make the claim without a tested and separately insured product |
| Territorial limits | Selling to customers in the United States or Canada, often including online orders | Declare export markets and buy the extension, or geoblock those countries |
| Named ingredients | CBD, hormones, certain actives, sometimes nut oils or high strength essential oils | Check the ingredient exclusion list before you formulate, not after |
| Products for animals | Paw balms and pet products under a policy written for human cosmetics | Ask for animal products to be added, or exclude them from the range |
| Services and treatments | Applying product to a client, teaching a workshop, hiring a hall | Separate treatment or tuition cover, which is a different policy |
| Product guarantee and recall | The cost of replacing your own product or getting it back | A recall extension if available, otherwise a cash reserve |
| Fines and penalties | Enforcement action against you | Uninsurable in the UK as a matter of public policy |
The first three do the most damage because they are the ones a maker walks into while writing marketing copy. A claim on a label can move a product out of the cosmetic definition altogether, at which point it is an unlicensed medicine and outside a cosmetic policy: the boundary and the wording that crosses it are in cosmetic versus drug claims. Sun protection is the clearest case of all, because an SPF number is a tested performance claim that a homemade product cannot support, for the reasons set out in SPF in lip balm and from the buyer's side in lip balm with SPF. Adding zinc oxide to a balm and printing a factor is simultaneously a regulatory offence and an uninsured product.
Most craft wordings make cover conditional on complying with the law that applies to the product. In the UK and EU that means the signed safety report, the product information file and the notification described in selling balms in the UK and EU. Selling without them is not merely an offence. It can also hand your insurer a reason to decline the claim you bought the policy for, which is the worst possible way to discover the assessment was not optional.
The product safety law that sits behind the policy
Insurance is what happens after harm. Product safety law obliges you to act before and around it, insured or not.
In Great Britain, cosmetics are governed by the UK Cosmetics Regulation, enforced through the Cosmetic Products Enforcement Regulations 2013 by local trading standards with the Office for Product Safety and Standards. The General Product Safety Regulations 2005 sit underneath as the general regime: they impose a general safety requirement and duties to inform enforcement authorities and to take corrective action, and they operate where the sector specific rules leave a gap rather than displacing them. Serious undesirable effects reported to you have their own route under Article 23 of the cosmetics regulation, which requires notification to the competent authority without delay.
For the European Union and Northern Ireland, Regulation (EU) 2023/988, the General Product Safety Regulation, has applied since 13 December 2024 and replaced the old directive. Cosmetics remain governed primarily by Regulation (EC) No 1223/2009, with the GPSR reaching the aspects the sector rules do not cover. What matters practically to a small seller are its distance selling and marketplace provisions, the requirement that an economic operator responsible for the product is established in the Union, the accident notification route through the Safety Business Gateway, and the consumer remedies that a recall must offer. Ship to EU consumers directly and those obligations are yours, not only the platform's.
The vocabulary matters when you are on the phone to an enforcement officer. A withdrawal stops a product moving any further down the chain. A recall asks for it back from the people who already have it. They are different measures with different costs, and the first is often enough.
How a recall actually runs, and what it costs
Recalls at craft scale almost never start with an injury. They start with a supplier telling you a lot of raw material was mislabelled, a customer photograph of mould on a salve, or your own realisation that a run went out with the wrong label version. The sequence from there is the same every time.
- Stop supply immediately. Quarantine everything on your shelves, pause the listings, and tell stockists to hold stock before you know the full scope. Reversing a pause is free; supplying one more affected unit is not.
- Define the scope from the records. Which batch codes share the affected raw material lot, packaging lot or label version, and where did those units go. This is the entire point of coding every unit, and a scheme that supports it is in the batch code generator.
- Assess the risk honestly. A cosmetic hazard with a plausible route to harm is different from a cosmetic defect that is merely embarrassing. A mould contaminated salve is the first. A batch that set with dips in the top is the second.
- Notify. Tell your insurer as soon as a claim looks possible, because late notification is itself a breach of condition. Tell the enforcement authority where the duty applies, which is trading standards or the OPSS in Great Britain and the national authority through the Safety Business Gateway for the EU.
- Reach the holders. Email direct customers, telephone stockists, post a notice on the site and social accounts, and put a notice at the stall you sell from. Say what the product is, which batch codes, what the problem is, what to do, and how to get money back.
- Recover, record and correct. Log every unit returned or confirmed destroyed, reconcile against the units made, then find the cause and change the process. The corrective action is what closes the file.
The cost is the part nobody plans for. The model below is a worked example rather than survey data: it prices one recall of a 1,000 unit lip balm run, retail £6, wholesale £3, cost to make £1.30, sold 60 per cent direct and 40 per cent through eight stockists, at 2026 UK values.
| Line | Assumption | Cost |
|---|---|---|
| Refunds to direct customers | 600 units at £6, 85 per cent claim | £3,060 |
| Credits to stockists | 400 units at £3 wholesale | £1,200 |
| Return postage | 450 returns at £2.20 prepaid | £990 |
| Your time | 50 hours at £15 opportunity cost | £750 |
| Investigation and analysis | One laboratory test to establish cause | £250 to £1,200 |
| Disposal and admin | Destruction, notices, replacement labels | £150 to £500 |
| Total | Excluding lost sales while the line is off | £6,400 to £7,700 |
That is £6.40 to £7.70 per unit made, against a £6 retail price. The useful rule to carry is that a full recall costs roughly the retail value of the batch again, and that none of it is normally paid by a standard liability policy, which responds to third party injury rather than to the cost of getting your own product back. Recall extensions exist but are often uneconomic at craft scale, so the honest answer is a cash reserve and better prevention. Prevention here is unglamorous and cheap: the contamination controls in workshop hygiene, a dating regime supported by shelf life testing, and label version control tied to the batch code.
Stock, equipment and the home workshop problem
Liability cover protects other people from you. It does nothing for your own materials, moulds, pans, scales, stock or the trade you lose while you replace them, and this is where a home based maker meets a specific trap: household insurance generally excludes business stock and business use, and in some wordings running an undeclared business from the property can prejudice the whole policy. Telling your home insurer what you do protects the buildings and contents cover you already pay for.
What to declare and insure separately, in rough order of how often it bites: finished stock and raw materials at cost, not retail, because that is the basis on which they will be settled; equipment, including the balance you calibrate against; goods in transit, which covers stock in the car on the way to a market; and business interruption, which pays the gap while you re-equip after a fire or flood. Storage matters as much as sums insured. A garage that swings between 2 C and 35 C is a stock loss waiting to happen for reasons covered in shipping in hot weather, and the insurer will not treat heat spoiled stock as accidental damage.
The decision rule, and what this page cannot do
If you sell anything to anyone, buy combined public and product liability at £5 million or £10 million, and buy it before the first sale rather than before the first market. Add employers' liability the day anyone else works for you, paid or effectively so. Declare your export markets, your ingredients and your activities honestly at inception, because a policy priced on incomplete information is worth less than the paper it is on. Then keep the compliance file current, because most wordings make it a condition of cover.
What cannot be done here is the specific part. No reference page can read your schedule, tell you whether a particular exclusion applies to your product, arrange cover, or say whether a defect you have found needs a withdrawal, a recall or a note in the file. Those answers come from your insurer, your broker, your safety assessor and, where a claim is live, a solicitor. The premium bands here are indicative and dated, and none of it is advice on your situation. Trebalm's general limits are set out in the safety disclaimer, and the pre-market obligations that most policies quietly depend on are in safety assessment and the CPSR.
Frequently asked questions
Do I need product liability insurance to sell handmade balms in the UK?
It is not required by statute, but it is required in practice. Stockists, market organisers and online platforms ask for a certificate, and without cover a single injury claim falls on you personally as a sole trader. Combined public and product liability at £5 million costs roughly £90 to £200 a year at craft scale in 2026, which is small against the exposure.
How much product liability cover should a small balm maker buy?
£5 million as a working default, £10 million if you supply retailers or attend council run events that require it. The step from £2 million to £5 million usually costs tens of pounds a year, and a serious injury claim including care costs and lost earnings can exceed £2 million on its own. Buy the limit your customers demand, then one step up.
Is employers' liability insurance compulsory if I only have weekend help?
Usually yes. The Employers' Liability (Compulsory Insurance) Act 1969 requires at least £5 million of cover for employees, and casual weekend helpers, paid friends and placement students commonly count. Narrow exemptions exist for close family employed by a sole trader and for a company whose only employee owns half the shares. Trading uninsured can attract a penalty for each day without cover.
Will my insurance pay for a product recall?
Normally not. Standard product liability responds to injury or property damage suffered by third parties, not to the cost of recovering, replacing or refunding your own product, which is usually excluded as product guarantee. A recall extension can be bought but is often uneconomic at small scale. Model the cost at roughly the retail value of the batch again and hold a reserve.
What voids a cosmetic liability policy?
Most often, non disclosure and non compliance. Selling without the safety assessment and notification the law requires, making medicinal or SPF claims, adding an excluded ingredient, shipping to the United States under a policy limited to the UK and EU, or failing to notify the insurer of a circumstance promptly. Read the exclusions and the conditions before the schedule, not after an incident.
What certificate do market organisers ask to see?
Usually public liability at £5 million, occasionally £2 million for a small hall or £10 million for council and large events. The certificate must show your trading name as booked, the limit of indemnity and dates covering the event day. Send it as a PDF when you book, and check that the policy does not expire part way through a season of confirmed dates.
Who is liable if I sell someone else's balm under my own label?
You are, alongside them. Under the Consumer Protection Act 1987 anyone who holds themselves out as the producer by putting their own name or trade mark on a product is treated as a producer, and so is anyone who imports it into the UK in the course of business. White labelling does not transfer the risk, so keep the supplier's documentation and insure the product as if you had made it.
Sources and further reading
- UK Government, Consumer Protection Act 1987, Part I, legislation.gov.uk.
- UK Government, Employers' Liability (Compulsory Insurance) Act 1969, legislation.gov.uk.
- UK Government, The General Product Safety Regulations 2005 (SI 2005/1803), legislation.gov.uk.
- UK Government, The Cosmetic Products Enforcement Regulations 2013 (SI 2013/1478), legislation.gov.uk.
- European Parliament and Council, Regulation (EU) 2023/988 on general product safety, EUR-Lex.
- Health and Safety Executive, Employers' Liability (Compulsory Insurance) Act 1969: a guide for employers, HSE, London.
- Office for Product Safety and Standards, Guidance for businesses on product safety and recalls, GOV.UK.
Reviewed and updated 6 September 2026. Spotted an error? Tell us and we will fix and log it.