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Even the biggest businesses around the world can experience product errors. Mistakes like this can cause several problems, resulting in millions of dollars in settlement or product recall.
If these businesses, equipped with all of the quality control methods that money can buy, can still make mistakes, your business certainly has to be careful of product liability.
Luckily, there’s a convenient way for you to avoid a devastating product-related incident, which is to avail product liability insurance. In this article, we’ll tell you everything you need to know about this handy financial security for your business.
Product Liability Insurance Definition
As careful as you might be in ensuring that your product is safe for your consumers, there is still always an amount of risk that you can face when you decide to go down this road.
If you are a manufacturer or a product designer, you are responsible for every aspect of your product, from its measurements to the materials it uses. If something goes wrong, your customers can rightly hold you accountable for any damages that your product causes.
These damages could come in the form of medical payments for an allergic reaction or from out-of-court settlement fees because of a mistake in your product’s design. Whatever the case, you are liable for every dollar that needs to be spent.
Product liability insurance protects you from this kind of disaster. This type of insurance policy covers all financial expenses arising from an issue with your product, whether it’s medical bills, legal costs, or settlement fees.
With this financial protection in your hands, you wouldn’t have to worry about all the expenses associated with product-related issues.
How Product Liability Insurance Works
A product liability insurance policy isn’t just optional for certain types of businesses – it’s absolutely necessary, especially for small businesses or start-ups with no deep pockets reserved for emergencies. Without it, your business–whether big or small–can suffer a devastating loss just because of an unforeseen error.
As mentioned above, your products can harm other people because of a mistake in design, hazardous manufacturing, false advertisement, missed warnings, and more. This policy kicks in when your product causes bodily injury, financial damages, or other sorts of negative impacts on your customers.
Who Needs Product Liability Insurance?
Product liability insurance is not for everyone; only certain businesses can benefit from this policy. If your business is as follows, you should get insurance write up soon:
- Manufacturers
- Product retailers
- Wholesalers
- Distributors
Product liability insurance for small businesses or startups is also available as long as you fall within those categories.
Product Liability Insurance Coverage
A product liability case can be highly stressful, not to mention expensive, so having the right insurance policy will no doubt be a lifesaver should the time come.
That’s why, if you’re planning to avail of this type of insurance, it’s essential to know what it covers. Product liability insurance protects your business in cases of:
- Design. Sometimes, your products can be improperly designed, leading to health or financial hazards. For example, if you’re a small company that manufactures electronics, a small design error might lead to a spark, which can cause a house fire.
- Marketing. False or misleading advertisement, misrepresentation, and damage to another person or entity’s reputation can be grounds for liability cases.
- Warnings. If you fail to warn your customers of potential risk and misuse of your product, then you will be liable for the damages should that risk happen.
This type of insurance can cover the cost of:
- Compensations
- Settlements
- Legal costs
- Medical expenses, and more.
How Much Product Liability Insurance Do You Need?
The scope of your product liability insurance policy can vary depending on your specifications, so you need to determine precisely how much insurance you need.
Generally, the more products you produce, the more at risk you are. Factors such as business size, client base, and sales per month can help you assess this situation.
However, the best way to determine how much insurance you need is by talking to our certified agents at Magnum Insurance.
Product Liability Insurance Cost
The price of your monthly premiums will depend on the following aspects:
- Business size
- Location
- Industry
- Claims history
- Desired policy limits
The best way to determine these costs is by talking to our expert agents.
Getting Product Liability Insurance with Magnum Insurance
If your business relies on producing, retailing, or distributing products, you must get product liability insurance.
Not only will it be handy to have when the time comes, but it can also make or break your business’s long-term success.
Get this insurance policy now at Magnum Insurance!
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