The Cost of Product Liability Insurance: What to Expect
Product liability insurance is necessary to financially protect a company against any claims or actions that arise as a result of defects or malfunctions in the products. The policy provides adequate coverage for the manufacturers/distributors/wholesalers/retailers/resellers’ liability resulting from product damage sustained by the third party due to lack of product warnings or defects in the product.
No matter what kind of products you deal with, there are plenty of opportunities for things to go wrong. Even the seemingly harmless products might sometimes get your company in legal trouble. Claims are incredibly expensive for defending them.
Australia has the best experts to consult and utilize abundant insurance services online. You can also compare numerous options and buy several policies like general liability policies, and professional indemnity insurance policies online in just a few clicks. When a third party accuses a professional of inflicting a loss as a result of their services or advice, professional indemnity insurance covers both the professional and their firm.
Is Product Liability Insurance Mandatory?
The value of product liability insurance cannot be undermined. While it isn’t mandatory, liability insurance is extremely important because the cost of the legal fees necessary to defend yourself may potentially cost your company tens of thousands of dollars. Companies are more vulnerable to third-party damage claims; thus, with adequate product liability insurance, you can reliably guard against damage.
Factors Affecting the Cost of Product Liability Insurance
The cost of insurance is determined by the type of product/business, manufacturing method, marketing methods, necessary safety measures, and revenue generated. Some of the factors influencing the cost of product liability insurance are listed below.
Risk level – Policy costs will be higher for businesses dealing with high-risk products such as medical devices, pharmaceuticals, and fireworks than for businesses dealing with low-risk products such as household items, stationery, buildings, retail establishments, and so on.
Company size and no. of employees – Another significant aspect affecting the price of the insurance policy is the size, scope, and manpower of the organisation. Large enterprises necessitate higher insurance prices.
Businesses operating in multiple locations or countries will have to pay higher for their product liability insurance coverage as the risk involved is also higher.
Location – Areas involved with theft, burglary, environmental/natural catastrophes, and fire hazards will require high-cost liability insurance. Selecting a locality, free from potential incidents or other environmental impacts have helped businesses to avoid higher premiums.
Cybersecurity – The ransom ware attacks might halt your business operations and create a cyber crisis. It is indeed necessary to restore your business operations in a timely way to limit the cost of a claim. Technology underpins nearly every part of businesses today and hence it is considered one of the vital factors to impact the cost of the product liability policy. The insurers will be provided with experts to work on this on a day-in and day-out basis and will be provided with an early warning system to receive the right responses.
Fire safety – A mandatory factor in assessing the workplace’s fire suppression system, sprinkler system, closest fire hydrant, and proximity of the fire station. This even impacts the entire cost of product liability insurance.
Workplace injuries – Some unavoidable injuries generally occur in industries like warehousing, construction, and many other working areas. The workplace injury claim cost is augmenting every passing year, hence impacting the cost of the policy.
Limit of Liability – A policy with a higher limit will cost more than a product liability policy with a lower limit and it depends on the insurer opting for the type of coverage required.
Prior claims experience – Every business experiences different difficulties and would have claimed more than once. The monthly premium cost of product liability insurance for such insurers is going to be higher than the insurers who have not faced any prior claims.
Product Liability Insurance Policy Online
In today’s ever-changing world, new technologies like online insurance services help tackle risks by easily engaging with risk consultants. Online services have the following advantages.
- 24*7 assistance in claims
- Dedicated relationship manager taking care of service-related queries immediately
- Getting swift responses through calls, emails, video conferences, and even in-person meetings.
- Providing potential plans and customized quotes with in-house product experts
- Enabling considerate add-ons.
A comprehensive product liability insurance is vital to protect your company from any financial downturns. Before selecting any policy, consult your broker to understand the terms and conditions involved. The cost of the insurance will vary depending on the underlying factors and be aware to choose the best.