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Small business product liability insurance is essential for those selling or manufacturing products. The three main types of coverage are for manufacturing defects, design problems, and inadequate labeling. General considerations include the level of coverage, premiums, global coverage, and product recall costs.
If you are starting a business where you will be selling or manufacturing products, it is important to protect yourself with small business liability insurance. However, not all small business product liability insurance policies are created equal for everyone. You need to know your product inside and out because the choice you make should be highly dependent on the nature of your business. The three main types of protection are those against manufacturing or manufacturing defects, design problems and inadequate labelling. While these are the most important factors when purchasing a small business product liability insurance policy, there are also general insurance considerations that you need to keep in mind.
The first type of protection that small business product liability insurance can offer its holder is for an inherent defect in the product based on the way it is manufactured. That clause would cover any harmful ingredients or chemicals in the product you make or sell. For example, if you sell or manufacture something that people ingest such as food, drink or medicine, you may want strong protection in that regard as it would cover any harmful ingredients.
If you’re selling something that consumers physically manipulate for use or that has multiple moving parts, then you’ll want small business product liability insurance that covers design defects. A design defect policy will cover any damage resulting from a malfunctioning part of the product. For example, if you sell hammers and the head of the hammer breaks, injuring the consumer, he or she could file a product liability lawsuit against you. The design defects clause in your small business product liability insurance policy would cover such damage.
The last major type of coverage available through small business liability insurance is protection for inadequate warning labels on a product on which it would normally be required. For example, if you are involved in the sale or manufacture of toys, this is an appropriate type of coverage. It would ensure that if you overlook any appropriate warnings or overstate the age range in which it is safe to use your product, you are covered.
There are also many general considerations to consider when purchasing a small business product liability insurance policy. You want to weigh the level of coverage against the premiums you are required to pay regularly to maintain your insurance. Also, if you ship products worldwide, you may need to find a policy that covers more than just the country of origin. Finally, you’ll probably want to get a policy that contains a clause that covers the cost of a product recall, as it can be a sloppy and costly process.
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