What is Product Liability Insurance For Small Businesses? If your company sells goods or services to customers or consumers, you may be in danger of a defective product causing damage or injuries to another person or property. For instance, lets say a consumer purchases a power drill from your company that is faulty. The drill he/she now owns causes injury or death to that consumer. The scenario is not farfetched, in fact it has become too common in the US. How would you react if your company sold a defective product to a customer?
A lot of small businesses fail to provide proper coverage to their product liability insurance. Some manufacturers fail to obtain coverage from a state law requiring manufacturers to carry adequate liability insurance. Manufacturers who do not have this type of coverage are required by law to obtain coverage from suppliers which requires an out of pocket expense. This can make buying these products quite expensive, particularly for small businesses.
Small business owners can increase the purchase price of their liability insurance by taking on more strict liability limits. By purchasing more strict liability limits, a manufacturer’s excess claims can be lessened resulting in a cheaper premium. This is because a manufacturer’s excess claims can often be considered “fault based” which means that if a claim is awarded to a competitor by a product liability insurance provider, the manufacturer’s costs may have been increased.
A higher premium is not always a bad thing, especially if a product liability insurance policy covers the full face value of the product. The cost of medical and other associated costs will be covered when an injured party decides to sue. This type of coverage can provide a tremendous amount of support to injured parties, thus making it a wise business decision.
Product liability insurance cost is also determined according to the extent of damage or harm caused by a product. The cost of this type of coverage will be less than a general liability insurance policy, which focuses on a single claim. Product liability insurance cost should be closely evaluated with the needs of business owners. Most insurance providers offer business owners a free quote on this policy.
Another facet of product liability insurance coverage to consider is the claims related to product defects. Fewer claims can be made against small businesses since they are less likely to be targeted by large manufacturers and manufacturing companies. However, there are instances where the business owners may be required to file a claim against a large manufacturer. There are companies that specialize in protecting small business owners against product defects and claims related to such defects.
General liability insurance, on the other hand, covers damages as a result of injury to an individual. This includes any bodily injury, property damage or death that has resulted from a product liability insurance claim. This type of coverage can protect business owners from claims related to negligence that may occur from a third party property owner that may have neglected to make sure that a factory was not producing faulty products. A third party property owner may also be responsible for injuries, death or property damage that has occurred from the use of a product, no matter who may have supplied the product.
It is very important to consider these differences between the two types of insurance coverage. Product liability insurance provides protection for claims related to negligence that occur from products that are defective. It can also cover claims related to advertising and product promotion. General liability coverage provides protection for injury, property damage and bodily injury that have resulted from products that are defective or that have been improperly used. These policies can be purchased at insurance providers that specialize in these services.