Product Liability Insurance for Small Business
Product liability insurance protects small businesses from claims that their products have caused injury or damage to others.
We’ll help you find the best price and most comprehensive coverage for this type of business insurance.
Recommended: Next Insurance is dedicated to matching small businesses with the right policy at the best price.
Why Product Liability Insurance Is Important for Small Businesses
Product liability insurance is a type of insurance that protects businesses from claims that their products have caused injury or damage to others.
This can include claims for bodily injury, property damage, and economic loss.
Product liability insurance can help to cover the cost of defending a lawsuit and paying out damages, which can be significant.
Product liability lawsuits can be costly and time-consuming. Even if your business is not found liable, you may still be required to pay for legal fees and other expenses associated with defending the lawsuit.
If your business is found liable, you could be required to pay out significant damages.
Here are some more reasons to have product liability coverage:
- It can help to protect your business's financial stability by covering the cost of claims.
- It can help protect your business's reputation — if your business is sued for a product liability claim, it could damage your reputation and make it harder to attract new customers.
Start an accurate online quote for business insurance
Finding the most affordable premiums starts with getting accurate quotes from highly rated providers.
Do Small Businesses Need Product Liability Insurance?
Not all small businesses need product liability insurance. The need for this type of insurance will depend on the type of products that the business sells, the size of the business, and the industry that the business operates in.
For example, a small business that sells handmade soap may not need product liability insurance if the soap is made with all-natural ingredients and the business has never had any issues with customers experiencing adverse reactions.
However, a small business that sells electronic devices or children's toys may have a higher risk of product liability claims and may need to consider product liability insurance.
In general, if your business sells physical products to customers, you should consider product liability insurance.
This includes businesses that manufacture, distribute, or sell products.
Note that even if your business is not directly responsible for manufacturing the products it sells, you could still be held liable if a product causes harm to a customer.
Recommended: Visit our Low-Cost Insurance Review to find the ideal balance of affordability and coverage.
What Does Product Liability Insurance Cover?
Product liability insurance typically covers claims related to bodily injury, property damage, and economic loss caused by a product.
This can include claims related to design defects, manufacturing defects, warning defects, and breach of warranty.
Design Defects
Design defects are issues with the product's design that make it inherently dangerous. For example, a toy with small parts that pose a choking hazard to young children would have a design defect.
Manufacturing Defects
Manufacturing defects are issues that arise during the manufacturing process that make the product dangerous. For example, a batch of medication that is contaminated with bacteria due to an error in the manufacturing process would have a manufacturing defect.
Warning Defects
Warning defects are issues related to inadequate or misleading warnings or instructions. For example, a product that does not have clear instructions for safe use could have a warning defect.
Breach of Warranty Claims
Product liability insurance may also cover claims related to breach of warranty. If a business makes a promise or guarantee about a product that is not fulfilled, it could result in a breach of warranty claim.
How Much Does Product Liability Insurance Cost?
The cost of product liability insurance will depend on a variety of factors, including the size of your business, the industry you operate in, and the type of products you sell.
In general, businesses with higher risks of product liability claims will pay higher premiums for product liability insurance.
To get an accurate quote for product liability insurance, you should speak with an insurance agent. The agent will be able to assess your specific risks and recommend a policy that provides the best coverage for your business.
It's also important to note that product liability insurance may be included as part of a general liability insurance policy.
General liability insurance typically covers claims related to bodily injury, property damage, and personal injury, as well as some types of product liability claims.
However, the coverage limits for product liability claims may be lower than for other types of claims, so it's important to review your policy carefully to ensure you have adequate coverage.
How to Purchase Product Liability Insurance
If you have determined that your small business needs product liability insurance, there are several steps you can take to purchase a policy:
Assess Your Risks
Before purchasing product liability insurance, you should assess the risks associated with your products.
Consider the types of products you sell, the potential risks associated with those products, and the likelihood of a product liability claim being made against your business.
Choose a Coverage Limit
The coverage limit for product liability insurance refers to the maximum amount of coverage the insurance policy will provide for a claim.
Choose a coverage limit that is high enough to cover the potential costs of a product liability claim but not so high that you are paying for coverage you don't need.
Consult With an Insurance Agent
An insurance agent can help you navigate the process of purchasing product liability insurance and ensure that you are getting the right coverage for your business.
An agent can also answer any questions you may have about the policy and provide guidance on risk management strategies.
Review Your Policy Regularly
It's important to review your product liability insurance policy regularly to ensure that it still provides adequate coverage for your business.
Product liability insurance is an important part of risk management for small businesses that sell physical products to customers. As your business grows and changes, your insurance needs may also change.
Protect Your Business Today
Using a fully online insurance provider saves time and money and offers the most accurate quotes.
FAQs
Product liability insurance is a type of insurance that protects small businesses from claims that their products have caused injury or damage to others. This can include claims for bodily injury, property damage, and economic loss.
Not all small businesses need product liability insurance. The need for this type of insurance will depend on the type of products that the business sells, the size of the business, and the industry that the business operates in.
Product liability insurance covers the costs associated with defending a product liability lawsuit, including legal fees and damages awarded to the claimant.
Businesses that manufacture, distribute, or sell physical products to customers should consider purchasing product liability insurance. This includes businesses in industries such as food and beverage, cosmetics, and consumer goods.
The cost of product liability insurance will vary depending on the size of the business, the type of products being sold, and the level of coverage needed. Small businesses can expect to pay anywhere from a few hundred to a few thousand dollars per year for product liability insurance.
It's important to speak with a business insurance agent to determine the level of coverage you need for your small business. The agent will be able to assess your specific risks and recommend a policy that will provide the best coverage for your business.
Yes, product liability insurance may be included as part of a general liability insurance policy. However, the coverage limits for product liability claims may be lower than for other types of claims, so it's important to review your policy carefully to ensure you have adequate coverage.