This is an awesome post. Liability insurance also covers the customer who comes to your house or shop to discuss design and buddy who comes over for a few lessons. Typically, your homeowners insurance would not cover commercial activity unless specifically declared. You are also so right about product risks if used improperly. You know there is a reason why the iron you just bought comes with a warning not to iron clothing still on your body.
Our experience in Canada may not be much use to you, but may be of interest. We used to sell about 5% of our total sales to the USA. Great customers. When we decided we'd grown to the point that liability insurance was necessary, we were astounded to find it was nearly impossible to get reasonable coverage to include sales to the USA. We shopped all over, and about 75% responded they would not cover us at all if we made a single sale to the USA. The others offered coverage at about quadruple the price. All made the same comment that the USA is well known to be the most litigious society on the planet, and outcomes seldom have much real relation to the concepts of true negligence or reasonableness.
We were very aware, before getting liability insurance, that even a frivolous lawsuit would put our home and life savings at risk. We've always been vigilant about discussing risks and safety as much as possible. We offer, but try not to rely on, safety information from Manufacturers (ie; the manual with the grinder of the MSDS sheet with quench oil for instance). We've incorporated, which is supposed to insulate us personally to some degree, but we have so much of our personal assets tied up in this business that corporate catastrophe would also ruin us. The liability and other commercial insurance take a huge chunk out of our profits, but we sleep a little better at night.
I've spoken with hundreds of knife makers, and haven't found one who has commercial liability insurance covering their craft. I hear things like "It's not my fault if someone kills someone with one of my knives." "Won't do them much good to sue me. Can't get blood from a stone". "My home owners insurance covers liability."
Caveat Emptor
Rob!
Rob!