If you operate a small business, you know how important it is to handle everything with importance and to offer the best in quality and service. But you also know that no matter how hard you try to provide the best, customers can still claim that youre at fault in a situation (even if youre not).
Nearly 80% of companies in the US are set up as a sole proprietorship or as a partnership. This kind of structure generally sets up a small business owner with a lot of risk both in the company and personally.
Business liability insurance covers your assets both business and personnel from damage through lawsuits.
In the case of a lawsuit filed for individual or property damage, this type of insurance covers legal fees and damages. Business liability is a big problem for most small businesses, because they dont understand it, and they dont really know the risk of not having it.
Having a general liability policy is the rule of thumb it provides the protection against things across the board, such as accusations and lawsuits against you for false marketing to injury claims and damages to property. Many companies who invest in liability insurance choose only this type of policy.
If, however, a business is selling products, product liability insurance is key. A suit brought against a small business based on personal injury or property damage resulting from a defective product can easily put a business out for good
product liability insurance protects a business from that danger by covering the expenses in those situations.
The cost for a product liability policy varies. If the product you sell is low-risk (like bookmarks) then your policy would be much more inexpensive than a policy for a company that sells something that could feasibly harm people, such as curling irons or flat irons, which involve high heats close to a persons body.
The most important thing is to evaluate the matter seriously, as you would anything else in your business, and check the options available that can help minimize your risk.
The first type of product liability insurance coverage involves a production flaw, which means that during the manufacturing process there was a flaw which can turn up later and injure someone. If you sell this product as a retailer you can still be held liable. A design defect will be covered by product liability insurance as well.
A design defect did not happen during the manufacturing process but the party or parties that designed the product did not see that the product will eventually fail. Poorly labeling of a product could get you hauled into court. An example of this is the label on motorcycles warning that this product, if not used properly, can injure and kill.
Your business is too valuable and you worked too hard to build it up and then lose it in a court suit. Pay the extra money for product liability insurance and sleep better at night.