You Know That Awesome Thing Your Business Makes & Sells? Insure It!

Posted on by George Murphy

Insurance for My What?

Product liability insurance protects you from claims filed against the design, production, marketing, sales, and use of your product(s). There are two main purposes of the coverage including:

Injury coverage, including medical costs, loss of service, and even death from injury as a result of use of product.

Property damage or loss, including physical damage to property, as well as loss of function of property.

Protection From The Big Bad Wolf of Claims 

The three most common claims product liability insurance deals with include manufacturing and design defects, as well as inadequate warnings/poor instructions. The first two have to do with issues in how the product is created and physically produced, the latter dealing with improper labeling or details in the instructions that leave risk of use unaddressed.

How Many Pennies Will I Pay?

The cost for this insurance will be different from business to business. Products range in size, shape, composition and intended use, but the generic five basic questions can help figuring it out.

-How many products will be manufactured? (The more the merrier!)

-Who is the target demographic and who will use the product? (Purpose of labeling “Ages ___ & Up.”)

-What type of product being insured, simple or complex? If it involves a motor or moving parts, there is more risk involved. The material also plays a factor as well.

-Where is the product made for and are storage or usage environment parameters clearly stated?

-When the product will be guaranteed working condition until or warrantied until?

P.L.I. Fun Facts 

Being underinsured for product liability can leave company profits exposed to lawsuits.

The stream of commerce idea expresses that even if your company does not make a product and if only involved in putting the product into distribution, your company is liable.

This insurance can be included in some commercial liability policies and may then be referred to as “products completed operations coverage.”

This coverage can only be obtained by businesses that have a storefront address and sales over $28k per year. Start-ups and small businesses must often insure their products out of pocket or through venture capital.

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