In today’s times of increased litigation, businesses should leave no stone unturned to secure themselves. There are many things that can go wrong with a product and might expose the company to chances of a lawsuit.
A Defective Product might cause Bodily Injury or Property Damage to a user of the Product. Even though the manufacturer might take all precautions possible, mistakes might still occur and cause damage. The injured person might sue the manufacturer or distributor for damages which may lead to enormous legal costs and damages in the product manufacturer or seller.
Thus, it is prudent to secure the business form the risk of lawsuits arising due to defective products by purchasing a Product Liability Insurance Policy.
What is a Product Liability Insurance Policy?
A Product Liability Insurance Policy protects your business from claims of Bodily Injury or Property Damage due to use of the company’s defective products. A Product Liability Insurance Policy pays for defence costs and compensatory damages awarded by the courts.
A Product Liability Insurance Policy can be purchased in combination with a Commercial General Liability Insurance Policy or as a standalone Policy.
What is the need for a Product Liability Insurance Policy?
A Product Liability Insurance Policy protects your business from the consequences of a claim arising out of the usage of a company’s products which turn out to be defective.
Product Liability Claims usually fall under 3 categories: Manufacturing Defect, Design Defect and Marketing Defect (Incorrect Labeling or Failure to Warn).
Additionally, it is not necessary that only manufacturers get sued due to product defects. Many a times, even the distributors or retailers might get sued due to a defective product.
Hence, a Product Liability Insurance Policy is important to protect your business from such lawsuits.
What are the factors that affect the Cost of Product Liability Insurance Policy?
Following factors affect the cost of Product Liability Insurance Policy:
- Type of Product: The type of Product being sold by the Insured is a major factor which impacts the cost of Product Liability Insurance Policy. For eg: The Cost of Product Liability Insurance Policy will be higher for business selling high-risk products such as Pharmaceuticals or Medical Devices as compared to businesses which sell low-risk products such as household items.
- Territory and Jurisdiction: Product Liability Insurance Policy offers Worldwide Coverage and coverage which is restricted to Indian Territory and Jurisdiction. Product Liability Insurance Policy with worldwide territory and Jurisdiction coverage will cost more as compared to policies which offer coverage just restricted to India.
- Limit of liability: The coverage limits sought by the Insured is an important factor that determines the cost of Product Liability Insurance Policy. Product Liability Insurance Policy with a higher limit will cost more as compared to a Product Liability Insurance Policy with a lower Limit of Liability.
- Deductibles: Deductible represent an amount of loss which will not be borne by the insurance company. Product Liability Insurance Policies with a higher deductible will cost less as compared to Product Liability Insurance with a lower deductible.
- Nature of Industry: Some industries inherently have a higher risk profile as compared to other industries when it comes to Product Liability. Firms in industries with a higher risk profile will have to purchase a Product Liability Insurance Policy with a higher premium as compared to firms belonging to industries with a lower risk profile.
- Size of the Business: The size and scale of the business is another important factor impacting the cost of a product liability insurance policy. Large Businesses or businesses that have a wider are considered to have a higher risk exposure and, as a result, such businesses have to pay more for their Product Liability Insurance Coverage.
Additionally, businesses that operate in multiple locations or sell products in multiple countries have to pay more for their product liability insurance coverage due to the increased risk associated with such operations.
- Prior Claims Experience: Firms which have faced Product Liability Insurance Claims in the past will have to pay a higher premium for a product Liability Insurance Policy as compared to firms which have not faced any prior claims
Get the Best Product Liability Insurance Quotes with Qian!
The Cost of Product Liability Insurance Policy depends on various factors. However, in general, the cost of a Product Liability Insurance Policy in India can range from a few thousand rupees per year for small businesses and low-risk products to several lakhs of rupees per year for larger businesses and high-risk products.
Product liability Insurance is an important coverage for businesses that manufacture, distribute, or sell products to secure them from liability arising out of claims related to bodily injury or property damage caused by their products.
The Cost of a Product Liability Insurance Policy in India depends on a number of factors such as type of product being sold, the size and scope of the business, and the level of risk associated with the product. Businesses should carefully consider the potential costs and benefits of product liability insurance and work with an experienced Product Liability Insurance Broker to determine the best coverage options for their specific needs.
Qian is a Licensed Product Liability Insurance Broker in India and can assist you with competitive product liability insurance quotes and coverages. If you wish to purchase a Product Liability Insurance Policy, you can email us at email@example.com or call us on 022-22044989.
We would be glad to assist you.