Making soap, lotions or personal-care products in Michigan? Have us review your program →
Michigan soap and cosmetics manufacturer insurance centers on products liability for skin reactions, burns and contamination claims, product recall coverage, property coverage that accounts for lye and flammable fragrance oils, workers' compensation, and vendor coverage for the retailers you sell through. For an established maker, liability should start at $1 million per occurrence and $1 million aggregate — which is also what Amazon will require from cosmetics sellers starting November 2, 2026.
The short version: Your product's legal category depends on what the label says, and that category decides which federal rules apply. Your biggest liability exposure is a reaction or contamination claim, and about three-quarters of FDA cosmetic recalls in recent studies were for microbial contamination — a recall your general liability policy will not pay for.
Soap, cosmetic or drug: the label decides
FDA's definition (21 CFR 701.20) treats a product as "soap" only if the bulk of its nonvolatile matter is fatty-acid salts made with an alkali, its cleaning action comes from those salts, and it is labeled and sold only as soap. True soap is regulated by the Consumer Product Safety Commission, not FDA. Change the claims and the category changes:
- Claims such as "moisturizing," "deodorizing" or making the user smell nice make it a cosmetic under FDA. The claim, not the scent, changes the category.
- "Antibacterial," or claims to treat acne or eczema, make it a drug, with drug manufacturing rules.
- Most "body bars" and liquid cleansers are synthetic detergents and are cosmetics, not soap.
Before you renew, have someone compare your labels, website copy and marketplace listings against how you describe your products to your insurer. A mismatch between your labels and your insurance application creates coverage questions.
What MoCRA requires — including from small businesses
The Modernization of Cosmetics Regulation Act of 2022 (MoCRA) gave FDA its first major new cosmetic authority in decades:
- Facility registration and product listing. Existing facilities were required to register by December 29, 2023; FDA enforced it starting July 1, 2024. Products must be listed with their ingredients and updated annually.
- Serious adverse event reporting. Reports go to FDA within 15 business days. "Serious" includes infections and significant disfigurement such as serious and persistent rashes or second- or third-degree burns. The law states that a report is not an admission that the product caused the event.
- Safety substantiation. The brand owner must keep records adequately substantiating each product's safety.
- Mandatory recall authority. FDA can now order a recall if a voluntary one is refused, where there is a reasonable probability a product is adulterated or misbranded and will cause serious adverse health consequences or death.
The small-business exemption is narrower than many makers assume. Companies averaging under $1 million a year in cosmetic sales (adjusted for inflation) are exempt only from manufacturing-practice requirements and registration and listing — and not at all for products that regularly contact the eye's mucous membrane, are injected or meant for internal use, or are meant to change appearance for more than 24 hours without the consumer removing them. Adverse event reporting, safety records, labeling and recall still apply. True soap falls outside MoCRA because it is not a cosmetic.
Amazon's new insurance rule for cosmetics sellers
Amazon has required sellers to carry commercial liability insurance once their sales exceed $10,000 in a month. According to Amazon's Seller Central announcement, starting November 2, 2026, sellers in its enhanced-safety categories, which Amazon says include cosmetic products, must carry at least $1 million per occurrence and $1 million aggregate regardless of sales volume. Large retailers and distributors set their own requirements, typically including additional insured status through a vendors endorsement. Read each agreement before you renew, because a policy that does not meet it can get your listings pulled.
The hazards in your production room
- Lye. Sodium hydroxide causes severe burns to eyes and skin; OSHA's exposure limit is 2 mg/m³. Handling, PPE and eyewash stations are workers' comp and underwriting questions.
- Fragrance and essential oils. Whether an oil is a flammable liquid depends on its flash point; many citrus-derived oils fall in the federal Category 3 flammable range that MIOSHA follows, and heating a liquid to within 30°F of its flash point triggers stricter handling. Check each safety data sheet and store accordingly; your property underwriter will ask.
- Contamination. Microbial contamination was the cause of about 77% of FDA cosmetic and personal-care product recalls from 2011 to 2023, according to a 2025 study.
Product liability and recall
Michigan caps non-economic damages in product liability cases at $596,400, or $1,065,000 for death or permanent loss of a vital bodily function, for 2026 — but economic damages and defense costs are not capped, and the higher cap lifts for gross negligence, with the caps removed for willful disregard of a known defect. If the specific aspect of your product that caused the injury met a federal or state safety standard relevant to that injury, Michigan law creates a rebuttable presumption that you are not liable (MCL 600.2946(4)). Good formulation and safety records support that defense; registration paperwork alone does not.
The standard general liability policy excludes the cost of recalling your product. It responds to injury claims, but recall, destruction and lost sales need product recall coverage. Our post on food manufacturer insurance explains how recall coverage triggers work.
For workers' comp, Michigan's manual rates soap manufacturing under code 4720 and cosmetics compounding (shampoos, lotions, perfumes) under 4611. A maker of both should keep payroll records separating the two; without them, all payroll can go to the higher-rated soap class. A shop that also makes its own ingredients, such as distilled essential oils, may fall under code 4825 instead of 4611.
Frequently Asked Questions
Is handmade soap regulated by the FDA?
Not if it is true soap. FDA treats a product as soap only if it is mainly fatty-acid salts made with an alkali and is labeled and sold only as soap; true soap is regulated by the Consumer Product Safety Commission. Claims such as moisturizing or deodorizing make it a cosmetic under FDA, and claims such as antibacterial make it a drug.
Does MoCRA apply to small cosmetic businesses?
Partly. Businesses averaging under $1 million a year in cosmetic sales are exempt from manufacturing-practice requirements and facility registration and product listing, unless their products regularly contact the eye, are injected or meant for internal use, or are meant to alter appearance for more than 24 hours. They still must report serious adverse events, keep safety substantiation records, follow labeling rules and comply with recalls.
Does Amazon require insurance for cosmetics sellers?
Yes. According to Amazon's Seller Central announcement, starting November 2, 2026, sellers in Amazon's enhanced-safety categories, which include cosmetics, must carry at least $1 million per occurrence and $1 million aggregate in liability coverage regardless of sales volume.
What causes most cosmetic recalls?
Microbial contamination. A 2025 study of FDA cosmetic and personal-care product recalls from 2011 to 2023 found about 77% involved microbial contamination, mostly bacteria.
What is the workers' comp class code for soap manufacturing in Michigan?
Michigan's classification manual places soap and synthetic detergent manufacturing under code 4720. Compounding cosmetics such as shampoos, lotions and perfumes falls under code 4611.
The bottom line
A personal-care maker's insurance should match what its labels actually claim, what its retailers actually require and how it would actually handle a recall. Those three answers are rarely in a quote.
We work best with established Michigan soap and personal-care manufacturers — a production facility with payroll, retail, wholesale or marketplace accounts, and a few years of loss runs. Send us your current declarations pages, your schedule of forms, your largest retailers' insurance requirements and your last two loss runs, and we will show you where the gaps are before we talk about price. J. Jacobs & Associates has insured Michigan businesses for more than forty years, and as an independent agency we take your program to multiple preferred carriers and the specialty markets that write recall coverage. Call (248) 693-6455 or request a manufacturing review.