Small Business Product Liability Insurance
In today’s American society, we have different types of insurance for our daily and professional lives. We all can benefit by understanding what the different types of insurances are available, such as products liability for the small business. Product liability can be best defined as the responsibility of a manufacturer or seller of goods to compensate for injury caused by defective merchandise that has been delivered into the marketplace for sale or distribution. An example would be an automobile which is involved in a head on collision and the airbags do not deploy and as a result, the owner of the vehicle suffers facial injuries. A claim would be asserted against the manufacturer of the car as well as the dealership which sold you the car. These types of cases can become very expensive to defend to the manufacturer and seller. It is for this reason, that all businesses, especially a small business, have a product liability insurance policy to protect them from these claims.
A manufacturer or seller can be subject to three different types of claims, which include, but are not necessarily limited to a manufacturing or production flaws, a claim the product was designed in a defective manner, as well as the warnings or instructions were inadequate or defective. If you are the owner of a small business which manufacture or sell such products, then product liability insurance is an absolute must. You do not want to be caught without insurance when a product liability lawsuit arises. Normally, your standard commercial liability policy or business owner’s policy will have some type of coverage. But you must make sure it is in the policy and you have adequate coverage. You should also review the policy and see if you have a deductible associated with any type of claim made against you. For example, the first $5,000 of the defense lawyer’s fees will be your responsibility. Or, any payment agreed to by your insurance company as a settlement or as the result of a legal judgment, will require you to pay a certain amount of the payment.
The small business owner must also consider the premiums for a product liability policy. The cost will be based upon the type of product, volume of sales, and the role the small business owner plays in the process. The cost for such coverage is not set forth in stone. You should do some research online to find the average cost of such insurance for your particular state. Fortunately, the small business owner has several different liability carriers to choose from. Competition for this type of coverage is strong and the small business owner should shop it out amongst the different insurance companies. While the chances are small that a small business owner will ever face a product liability claim, it only takes one case that could exhaust the financial resources of the small business owner. Through the purchase of a product liability policy, the small business owner can transfer his risk onto the insurance carrier, and avoid potential ruin.