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Subject: Insuring a Game for Retailers rss

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Cody Faulk
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Have any designers/publishers had to get insurance for their card game before working with distributors/retailers? We have been contacted by a major retailer/distributor with interest in purchasing our game, but apparently one of the requirements is that we have insurance. This is something we don't know much about, so any general insight and/or guidance where to be begin with that process and what to expect would be very much appreciated!

-Escape Hatch Games
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Brad Miller
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No idea, but sounds sketchy. What kind of insurance?
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Michael Knight
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Sounds strange but I guess I could see it. I assume they want shipping insurance?
 
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Nick Hayes
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Never heard of it before. Maybe they're talking about buyback? That's when you offer to buy back unsold product after a certain period of time.
 
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Cody Faulk
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They're looking for general liability and product liability.

So this isn't typical in your experience?
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Dimitri Sirenko
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CodyTheEscapist wrote:
Have any designers/publishers had to get insurance for their card game before working with distributors/retailers? We have been contacted by a major retailer/distributor with interest in purchasing our game, but apparently one of the requirements is that we have insurance. This is something we don't know much about, so any general insight and/or guidance where to be begin with that process and what to expect would be very much appreciated!

-Escape Hatch Games


well if it is what others are suggesting then its quite BS to be honest. I would not take the type of deal where if the game does not do well you are responsible for it. I mean, sounds like these guys are trying to take any responsibility and risk off their shoulders. Not a very good business transaction imo. Its like having an investor that forces you to pay him all the money back if the product fails, which clearly makes him not an investor and more of a credit loan company. I would try to find other options in all honesty (that is IF "insurance" means what I think it does of course)

your best bet is just to straight up ask them what exactly that "insurance" entails and then make your judgement based on their answer
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Jeremy Lennert
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3CreativeMinds wrote:
Its like having an investor that forces you to pay him all the money back if the product fails, which clearly makes him not an investor and more of a credit loan company.

Investors and credit loan companies are different, but both are legitimate businesses that you might want to use under appropriate circumstances.

I've heard stories from several different sources about bookstores that had the option to return unsold merchandise for a refund, and have the vague impression that it's fairly common for books. I haven't heard of it for games, but I've never been personally involved in selling to a store or distributor, so that doesn't mean much.

CodyTheEscapist wrote:
They're looking for general liability and product liability.

So this isn't typical in your experience?

My gut feel is that this is probably a multi-product store that made some high-level decision that they will only carry products that are insured and hasn't bothered to evaluate on a product-by-product basis whether that actually makes sense. But again, I have no direct experience here, so that's little more than a blind guess.

Most of the people on the designer forums are not publishers.
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William Springer
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Antistone wrote:

I've heard stories from several different sources about bookstores that had the option to return unsold merchandise for a refund, and have the vague impression that it's fairly common for books.


There's a reason books tend to have that "if you purchased this book without its cover.." blurb - they often just have to ship back the covers and destroy the books.

Last year I was looking into the costs of printing a magazine and learned that between the retailer discount, the distributor fees, and the cost of buybacks, that you don't actually make any money on copies of your magazine sold in bookstores - you sell it in bookstores to get more people to see it and subscribe, and the bookstores display it to get people in to buy coffee.
 
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Dimitri Sirenko
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Antistone wrote:
3CreativeMinds wrote:
Its like having an investor that forces you to pay him all the money back if the product fails, which clearly makes him not an investor and more of a credit loan company.

Investors and credit loan companies are different, but both are legitimate businesses that you might want to use under appropriate circumstances.

I've heard stories from several different sources about bookstores that had the option to return unsold merchandise for a refund, and have the vague impression that it's fairly common for books. I haven't heard of it for games, but I've never been personally involved in selling to a store or distributor, so that doesn't mean much.

CodyTheEscapist wrote:
They're looking for general liability and product liability.

So this isn't typical in your experience?

My gut feel is that this is probably a multi-product store that made some high-level decision that they will only carry products that are insured and hasn't bothered to evaluate on a product-by-product basis whether that actually makes sense. But again, I have no direct experience here, so that's little more than a blind guess.

Most of the people on the designer forums are not publishers.


ohh yes for sure both are legitimate business practices but the question is which business deal would be more beneficial to you. That's business school 101. Sometimes it's better not to take a deal at all if you feel that the deal does not benefit you as much as it should. But that's just my take on this. Other people may find that this is still something they don't mind and still go for it for whatever reasons they may have. Again, i would try to find out more about this deal and go from there before drawing any final conclusions.
 
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Con
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It seems to be a big enough thing so that this company has a specific insurance offering for board and card game manufacturers. https://www.blackfriarsgroup.com/card-and-board-game-manufac...
 
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Dimitri Sirenko
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ConG wrote:
It seems to be a big enough thing so that this company has a specific insurance offering for board and card game manufacturers. https://www.blackfriarsgroup.com/card-and-board-game-manufac...


interesting. So would OP need to pay for this insurance or would the cost be split between the two parties doing business?
 
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Jeff Rietveld
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3CreativeMinds wrote:
ConG wrote:
It seems to be a big enough thing so that this company has a specific insurance offering for board and card game manufacturers. https://www.blackfriarsgroup.com/card-and-board-game-manufac...


interesting. So would OP need to pay for this insurance or would the cost be split between the two parties doing business?

I had a customer design and produce several thousand travel cribbage boards, and Walgreens and Target would only purchase them if he had insurance.
It would have put him out of business, so he just sold them to game stores, drug stores, etc.
 
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Jeremy Lennert
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3CreativeMinds wrote:
So would OP need to pay for this insurance or would the cost be split between the two parties doing business?

Insurance is normally paid for by whatever party would be liable for the risk it covers in the absence of said insurance.

When business partners demand you have insurance (e.g. if your landlord demands that you have renter's insurance, or when the government requires drivers to have insurance), that's just a way of proving that you will actually be able to cover that cost if it comes up. (In fact, instead of buying driving insurance, you can "insure yourself" by posting a deposit of at least a certain size to prove you could pay if necessary.)

Also, insurance on your product probably covers that product regardless of where or how it's sold. That would presumably benefit all stores carrying your product, which would make it hard to get any single store to pay for it directly.
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Nolan Lichti
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CodyTheEscapist wrote:
They're looking for general liability and product liability.

So this isn't typical in your experience?

Caveat: I have no experience in publishing, or in underwriting insurance or claims. I'm going to oversimplify this a bit.

Liability insurance basically covers you if something causes loss or damage to you or others. General liability is more broad, covering losses that occur in the process of doing business. Product liability covers losses that occur due to faulty product.

Most likely they want to ensure that if something happens in the course of doing business with you, whether through logistics or because of the product itself, they won't be stuck with the bill because you have no insurance or cash (I'm going to assume as a small publisher that your cash flow is low).

Typical? No idea. I imagine that is their reasoning, though.
 
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Cody Faulk
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FunkCracker wrote:
CodyTheEscapist wrote:
They're looking for general liability and product liability.

So this isn't typical in your experience?

Caveat: I have no experience in publishing, or in underwriting insurance or claims. I'm going to oversimplify this a bit.

Liability insurance basically covers you if something causes loss or damage to you or others. General liability is more broad, covering losses that occur in the process of doing business. Product liability covers losses that occur due to faulty product.

Most likely they want to ensure that if something happens in the course of doing business with you, whether through logistics or because of the product itself, they won't be stuck with the bill because you have no insurance or cash (I'm going to assume as a small publisher that your cash flow is low).

Typical? No idea. I imagine that is their reasoning, though.


In speaking with the company, product insurance is, for example, to handle any issues with someone making a liability claim against the game. In this case, it is a card game, so the insurance is in case someone gets a papercut, then an infection that puts them in the hospital, for instance.

I'm still no closer to finding a carrier for this, really.
 
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Jason Rayburn
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Hey all, I've only recently posted a game i'm working on here on BGG and have already received some great help and feedback so it's time to try and give back a little.
I AM actually a licensed insurance agent though I specialize in personal lines and haven't had many commercial policies cross my desk, I will offer up some info I've picked up and hopefully it helps point you in the right direction.
Firstly, I am not to be held liable for any actions taken by you, the reader, regarding this. It is merely information that I am providing and am in no way accountable for what you do with it. Okay, now that that's done:
Let me start by saying I am licensed for California only and every state is a bit different. You should contact a Broker in your state, but i'll get to that in a bit.
Firstly, a retail company asking for you to have insurance isn't a scam. It's pretty common. Even if you aren't going to be dealing with big retail companies I suggest you look into insurance anyway.
Why?
Well for one, if you do ever take responsibility for storing your product and something happens? Like a fire? There goes all your hard work and thousands of copies of your game and you're still on the hook to deliver product to all your clients you ordered it for.
But I'm fine, you may think, I store it in my garage and my renters/homeowners insurance will cover that. No, not likely.
Like I said, I handle California but essentially there's a few things happening here. While a homeowners policy can have a Business endorsement added to it, that is typically for someone with a home office like a Day-trader, not as a warehouse, and doesn't provide that kind of coverage. If a fire hit the garage, or a pipe burst and ruined your shipment and you filed a claim, the Adjuster handling it will need to know what it is that is being replaced and explaining you had 2,000 copies of a board game is going to raise quite a few red flags as that is not "Personal Property" like your tv and couch is.
Well why not? To simplify things, there are two entities here. You as the Individual, and you as the Company. The insurance for one does not cover the other.
How you advertise the product can come into play too. If you say your game can "teach kids how to do basic math", someone may come after you because all they did was play your game with their kid and they still can't add 2+2. It sounds ridiculous I know, but we live in a world where a woman sued McDonalds because she spilled her hot coffee and it was HOT!

Okay, so that's a little bit of the background of what's essentially happening. Here's some things you can try and do:
Before you start hunting for a place that will provide insurance, do a bit of research into what goes on with your stuff.
Find out where you product goes from start to finish and check in with each group that handles it.
Sure the chinese manufacturing company is cheap but if the container holding your shipment on the boat falls into the water, do they cover that or do you?
Call around and find an Insurance Broker that operates in your state and ask if they charge Broker fees. If they say yes, move on until you find one that doesn't. If they do charge fees that means every time you ask them to update your stuff, they charge you for doing it.
Why a Broker? You may ask. Why don't I just call up Liberty Mutual and deal with them direct?
Well, for starters Brokers have access to lots of different companies and every insurance company has a different appetite for what they want to insure. Even if 5 companies will all insure what you're doing the prices can vary wildly for the exact same coverage because what you do may be right up their alley or just barely tolerated.
Once you've found one that does not charge fees talk to one of the agents who deals with commercial lines and explain what it is you are being asked to have.
Try to have as much info on your company handy as possible, like your FEIN (Federal Employee Identification Number) also called an EIN.
Be patient and above all be HONEST when answering their questions. They are trying to familiarize themselves with what you do and the more they know the better they can help. If you get frustrated expecting to just call and say "I make games, how much does that kind of insurance cost?" you'll get no where. It doesn't work that way at all and is similar in frustration to someone saying to you "I play Monopoly, so I know how to play every game because they're all the same thing."
I can't stress being honest enough. If the information given isn't correct, the insurance is not going to be correct and when you need to use it, it will fail you and you will have paid for nothing. If you don't know the answer to a question, don't guess either, just say you'll need to find out and then actually go find out.
Similarly, ask whatever you'd like of them. They may even say the same thing. There is a ridiculous amount of insurance types out there and no one will know them all.
Bottom line, at least check. You aren't on the hook to buy the coverage if you don't want to, but at least you'll be more aware of how things work.
Hope this helps a bit.
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Cody Faulk
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unstablerobot wrote:
Hey all, I've only recently posted a game i'm working on here on BGG and have already received some great help and feedback so it's time to try and give back a little.
I AM actually a licensed insurance agent though I specialize in personal lines and haven't had many commercial policies cross my desk, I will offer up some info I've picked up and hopefully it helps point you in the right direction.
Firstly, I am not to be held liable for any actions taken by you, the reader, regarding this. It is merely information that I am providing and am in no way accountable for what you do with it. Okay, now that that's done:
Let me start by saying I am licensed for California only and every state is a bit different. You should contact a Broker in your state, but i'll get to that in a bit.
Firstly, a retail company asking for you to have insurance isn't a scam. It's pretty common. Even if you aren't going to be dealing with big retail companies I suggest you look into insurance anyway.
Why?
Well for one, if you do ever take responsibility for storing your product and something happens? Like a fire? There goes all your hard work and thousands of copies of your game and you're still on the hook to deliver product to all your clients you ordered it for.
But I'm fine, you may think, I store it in my garage and my renters/homeowners insurance will cover that. No, not likely.
Like I said, I handle California but essentially there's a few things happening here. While a homeowners policy can have a Business endorsement added to it, that is typically for someone with a home office like a Day-trader, not as a warehouse, and doesn't provide that kind of coverage. If a fire hit the garage, or a pipe burst and ruined your shipment and you filed a claim, the Adjuster handling it will need to know what it is that is being replaced and explaining you had 2,000 copies of a board game is going to raise quite a few red flags as that is not "Personal Property" like your tv and couch is.
Well why not? To simplify things, there are two entities here. You as the Individual, and you as the Company. The insurance for one does not cover the other.
How you advertise the product can come into play too. If you say your game can "teach kids how to do basic math", someone may come after you because all they did was play your game with their kid and they still can't add 2+2. It sounds ridiculous I know, but we live in a world where a woman sued McDonalds because she spilled her hot coffee and it was HOT!

Okay, so that's a little bit of the background of what's essentially happening. Here's some things you can try and do:
Before you start hunting for a place that will provide insurance, do a bit of research into what goes on with your stuff.
Find out where you product goes from start to finish and check in with each group that handles it.
Sure the chinese manufacturing company is cheap but if the container holding your shipment on the boat falls into the water, do they cover that or do you?
Call around and find an Insurance Broker that operates in your state and ask if they charge Broker fees. If they say yes, move on until you find one that doesn't. If they do charge fees that means every time you ask them to update your stuff, they charge you for doing it.
Why a Broker? You may ask. Why don't I just call up Liberty Mutual and deal with them direct?
Well, for starters Brokers have access to lots of different companies and every insurance company has a different appetite for what they want to insure. Even if 5 companies will all insure what you're doing the prices can vary wildly for the exact same coverage because what you do may be right up their alley or just barely tolerated.
Once you've found one that does not charge fees talk to one of the agents who deals with commercial lines and explain what it is you are being asked to have.
Try to have as much info on your company handy as possible, like your FEIN (Federal Employee Identification Number) also called an EIN.
Be patient and above all be HONEST when answering their questions. They are trying to familiarize themselves with what you do and the more they know the better they can help. If you get frustrated expecting to just call and say "I make games, how much does that kind of insurance cost?" you'll get no where. It doesn't work that way at all and is similar in frustration to someone saying to you "I play Monopoly, so I know how to play every game because they're all the same thing."
I can't stress being honest enough. If the information given isn't correct, the insurance is not going to be correct and when you need to use it, it will fail you and you will have paid for nothing. If you don't know the answer to a question, don't guess either, just say you'll need to find out and then actually go find out.
Similarly, ask whatever you'd like of them. They may even say the same thing. There is a ridiculous amount of insurance types out there and no one will know them all.
Bottom line, at least check. You aren't on the hook to buy the coverage if you don't want to, but at least you'll be more aware of how things work.
Hope this helps a bit.


Very helpful, thanks! Now I just need to find an agent who can do this in Missouri!
 
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Jason Rayburn
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You're welcome, glad I could help!
 
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I had meant to reply to this but forgot and Jason sort of explained it all pretty well.

I have run sales/marketing for a worldwide brand that sold relatively inexpensive and benign products into retail, and have personally sold into Apple, Best Buy, Office Depot, etc. I.e. they weren't products with batteries or that could explode, catch fire, etc.

It is true that all major retailers look for their vendors to provide $1m in general liability insurance coverage. It is mostly to protect them (the retailer) from liability - someone can decide to sue the retailer if something bad happens to them as a result of a product they bought there. And yes, they could also come after your policy if you somehow fail to meet your obligations to them.

Carrying tons of products exposes them to massive liability, so they push a lot off that off to their vendors. And while I can't prove this, I've always assumed it's a domino effect. The retailer probably has a large policy, that, in order to lower their own premiums, probably mandates that all their vendors carry coverage as well. Worse, they usually want you to list them as a NAMED INSURED on their policy - which means you have to hassle your insurance carrier to literally add 'Target' or 'Barnes and Noble' or whatever, to that general liability policy, which may incur additional charges or costs to the vendor.

So, TLDR: It's not a scam at all, it's standard practice for retailers, and sucks for small businesses.

If it matters, I have rarely been asked for those insurance documents, but I always did have to sign off that we did have that coverage and would provide those documents.
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Jason Rayburn
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Thanks Sean! I tried to keep it simple but relevant. Hopefully this may help as well. Again, I'm not held accountable for what the reader does with this info.
Sean I think you mean Additional Insured and not Named Insured. That's what is requested when a company requires a Certificate of Liability. This can definitely cost money to have an Additional Insured added but there are also insurance companies that don't charge for that and give you unlimited additional insureds. This is huge for contractors as they are constantly working for new companies or on new projects. For those game designers that may be working with lots of retail companies, or plan to, that might be something you should ask the broker about when getting quotes. It may all sound absolutely daunting but if you get a good insurance agency they will get you all the paperwork you need regarding this. You can also ask for a "For Records Only" copy of your Certificate of Liability so that in situations like Sean describes where they don't need to be listed but know that you have it, you can provide proof.
Don't let this stuff freak you out though. If someone slips on a puddle in a Target shopping aisle they aren't going to tap into your insurance since it has nothing to do with your product.
 
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DJ Wilde
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Wow. I just learned something today. Thanks, Jason! Well done!
 
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