Product Liability Insurance Cost
Product liability insurance has several factors influencing the rate of cost for each individual company. The different types of liability the company may be subject to along with several basic environmental factors may determine whether or not a certain company is insurable for less than the next. Types of liability are the different ways in which a specific company can be considered responsible for the safety of their product. Basic design flaws can cause the manufacturer to be liable for creating a product that was not carefully inspected before production. Manufacturing issues may cause a perfectly acceptable item to become hazardous and enter the market without anyone realizing there is a problem. This can leave everyone, from the manufacturer to the retail store that sold the item, responsible for putting a defective product into circulation. Defective warnings are liabilities when someone injures themselves because the marketing for an item did not address a certain issue. In the realm of pharmaceuticals, medical liability may come into play if medicines begin to show long term affects that were not originally published and warned about in studies. How often you come into contact with these different possible types of liability issues can affect the amount you will have to pay for product liability insurance.
Factors of liability are the biggest determining factor when dealing with liability insurance. The type of business is considered first. If you are a pharmaceutical company it will cost more to ensure your group than if you run the yo-yo making plant. Mistakes in medical field can be fairly costly and are often hard to fix. The volume of sales is also another large factor. If you have a higher number of items sold, it stands to reason that there are going to be more chances of a liability issue. The next factor is where your business is located. Some areas of the country have a higher number of liability claims and therefore your location becomes a factor insurance companies must consider. If you are a company that has been around for a while, you may have to deal with previous liability suits on your record. If there is a high number, it will cause the insurance premiums to go up or the insurance company may refuse to cover. An interesting and not often discussed factor is whether or not the company is publically based or private. Public companies run fewer risks of liability claims, causing their insurance costs to be lower. Also influencing the cost is whether or not legal fees are to be covered in the policy. Always make sure to check before closing on a deal that seems better than can be expected!
Insurance companies consider a wide range of factors when looking towards insuring a company. From where the business is located to how many items are sold, the price is affected by every detail. Companies can work at keeping their liability costs low by making quality products so there are fewer suits and bundling their liability insurance with other insurances at the same company, but most of the other factors are determined based on what business you are trying to run.