If you manufacture or sell any type of product that can cause bodily injury or property damage, then you are at risk of being sued by a customer. Having product liability insurance can help reduce a lot of the costs associated with litigation, and looking into this type of coverage is worth the time and effort.
It may seem like only large corporations with millions of dollars that distribute a lot of products should have product liability coverage, but it’s beneficial for small businesses as well. In fact, it may be even more prudent for your small business to get this coverage to ensure that a lawsuit doesn’t put you completely out of business.
Small Businesses That Should Consider Getting Product Liability Insurance
The truth is that any and all businesses can benefit from having product liability insurance. This coverage takes care of any judgments that you have to pay to customers who sued you, and it also takes care of your legal fees, including paying for your lawyer. You’ll have to pay a premium each month to have this policy in place, but this could be more affordable than having to pay huge sums of money out of your pocket after a lawsuit.
Despite the type of business you own, you should consider getting product liability coverage. However, some of the small businesses that can save a lot in the long run by having this insurance coverage in place include the following:
- Online retailers
- Pet supplies shops
- Coffee shops
- Food shops
- Online and storefront clothing stores
- Equipment suppliers
Coverage Provided by Product Liability Insurance
If a customer decides to sue your small business, they have to be able to prove that the product they got from you caused harm. The damage may have been caused by the design, manufacturing, or distribution of the particular product.
When it comes to product liability insurance, it covers three main defect categories:
Design defects usually apply to an entire product line and make them inherently dangerous. One of the most common examples that are used is a car that is top-heavy, which means that every time it turns, it flips over.
These flaws show up during the production phase and create a product defect that can then cause bodily injury or property damage. An example of this would be a hammock that has a weakened chain or loose screw that causes the supports to collapse.
Defective Instructions or Warnings
If a product doesn’t have adequate instructions or proper warnings, this could lead to a person getting injured. An example of this would be a cleaning product that can’t be mixed with water. If this information is unclear or missing, and the customer mixes it with water and gets injured, or property damage occurs, then they can sue for compensation.
If you have product liability coverage and the judge finds that you are negligent in any of these areas, your insurance will cover the expenses.
Benefits of Product Liability Coverage
Having product liability insurance isn’t only for large businesses. It can be incredibly beneficial for your small business. When you have this policy in place, you will be covered if your business ever becomes the subject of a lawsuit—and that can give you peace of mind and pay for expenses that might arise.
Any small business can benefit from having this insurance coverage and finding the policy that’s right for you only requires a call to an insurance provider. It’s worth the time and effort it takes to add this insurance to your business.