When it comes to product liability insurance, you have this in place to protect your business from any unforeseen problems that might arise from the products you make or sell. Should the product cause an injury, the insurance will be there to pay for the injured customers’ medical expenses or repair bills. It will also cover your legal fees.
Product liability insurance is an incredibly beneficial and important part of running a business. Having this coverage could be the difference between being able to stay in operation after having a claim filed against you, or it could mean shutting your doors for good.
If you are thinking about getting this insurance coverage, you might be wondering how much coverage your business needs.
How Much Insurance Do You Need?
The amount of product liability insurance you get will depend on the types of products you are creating or selling and how much protection you want. If you are creating and selling biotech or medical products, fireworks or firearms, you are in a higher risk category of potentially being sued by customers. Thus, having more coverage might be in your best interest.
If your business comes into a lower risk category, such as yoga mats or socks, you may not need as much insurance. How much coverage you get will have an impact on the cost you pay each month.
Some other factors that should be considered when looking at product liability insurance coverage and cost include the following:
The Industry You Are In
Not only do certain products carry more risk than others, but certain industries also have higher standards and are subject to more lawsuits than others.
If you happen to fall into one of these industries, you may need more insurance coverage.
Where You Are Located
The state in which your business is stationed might have its own laws and regulations when it comes to having product liability insurance.
They may require a minimum amount, but you always have the option of getting more coverage.
How Much Revenue Your Business Brings In
If your company is ever sued, a judge may look at how much annual revenue your business brings in and use that to determine how much you owe the customer in damages.
Thus, you might consider using this amount when it comes to deciding how much product liability coverage you should get.
Why You Need Product Liability Insurance
Getting product liability coverage will be an added expense for your business. However, before you decide that you aren’t going to pay this premium every month, you need to consider how much it will cost if your company has a claim filed against it.
The possibility of one lawsuit bankrupting your business is real. Therefore, it’s in your best interest to pay the lower premium every month to keep yourself covered.
Who Should Consider Getting Insurance for Product Liability?
Any business can benefit from having product liability insurance, especially if there’s a chance the product can cause any damages or injuries to customers. However, those who should seriously consider adding this insurance to their business include:
- Wholesale distributors
- Manufacturers
- Ecommerce business owners
- Ecommerce drop shippers
- Retailers who sell products to the general public
Finding the Right Coverage
When it comes to product liability coverage, you need to find one that will work for your business needs, and talking to an insurance agent is incredibly helpful in that endeavor. Don’t put your business at risk. Find the coverage that’s right for you as soon as you can.
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