You know that if you manufacture any product, you must carry a particular type of liability insurance called product liability. This is designed to protect you from any claims against your company based on injuries or damage your product might cause to the public. Every company owner has seen the type of lawsuit that product liability protects against, but most believe it is unlikely to happen to them. This could be true, but wouldn’t you be prepared if it did happen to you?
Don’t Take A Chance
Do you believe your product is safe; of course you do. You have gone through all the necessary procedures to make sure it is. So while you acknowledge that you should have product liability, you probably think minimal coverage should be acceptable. This thinking is prevalent in products not seen as potentially dangerous. After all, you don’t make chainsaws. You make stuffed toys!
While it is true that the type of product you make can determine how likely it is that you will one day be facing a lawsuit, this shouldn’t be the deciding factor in how much coverage to carry. When you take out a lower policy based on your belief that you are not in a high-risk category, you are taking a chance that is not worth taking.
How Much Coverage Do You Need?
The answer to this is straightforward. As with any liability policy, removing as much as possible is the best action. If you make a product that isn’t considered high-risk, your premiums should be quite affordable. And if you make a product with potential dangers, you need to pay that premium no matter how high because a lawsuit will cost much more.
Liability insurance is one of those coverage options where the people who claim they can’t afford it are the ones who need it most. Paying for the insurance now is much better than paying for a settlement later. Sit down with your insurance agent and find out how much coverage you have for product liability and how high you can go.
Product liability is an area of insurance constantly growing as recalls are increasingly common and lawsuits even more expensive. No matter what your product is, this is not an area of your insurance that you should not cut back on.
Don Westerfeld has been active in the field of Insurance and Financial Planning since 1997. Don grew up in Indiana later moving to Lakeland Florida where he continues to reside with his wife and children. When he’s not in the office you can find him enjoying the great outdoors. He has served on several charitable business and non-profit organizations and continues to provide guidance, advice and support to local charities.
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