Should You Have Product Liability Insurance?
by Joe Soda on Wednesday, August 3, 2016
Selling products like supplements and essential oils in your naturopathic practice may be beneficial to you and your patients. It's important to keep in mind; however, that your current insurance coverage may not fully protect you against this exposure.
Product liability insurance can protect you and your practice if an injury occurred due to a defect, flaw, or malfunction in a product you've sold.
Product liability insurance provides coverage for claims such as:
- Manufacturing or production flaws that cause unsafe defects in the product
- Design defects that make the product unsafe for use
- Failure to provide adequate defect warnings or instructions for using the product
If you're wondering why you'd need this insurance when the product is manufactured by someone else—here's the answer: Most states follow the "stream of commerce" model of liability. If you or your practice participate in placing the product into the "stream of commerce," you (or your practice) can be held liable for damages to the end user.
For example, if someone suffers from an allergic reaction to supplements, you can be held liable if you sold or provided the product.
How is the Premium for Coverage Determined?
The premium for product liability insurance will, of course, depend partly on the amount of coverage you purchase. Factors also include the type of product, volume of sales, and your role in the process.
It's extremely important to accurately report volume of sales and the specific products utilized. In many instances, additional fees may be applied if you attempt to underinsure.
At the end of the policy period, there will be an insurer audit for sales volume. If actual sales differ from anticipated sales, an additional premium will be charged to reflect the increased sales.
While product liability insurance may seem unnecessary to small businesses, it is a small price to protect your practice.
For a comprehensive review of your current policies, contact one of our agents today. Call 800-769-2000, ext. 8180 or email firstname.lastname@example.org.