Calgary is recognized as Canada’s small business capital because of its competitive tax rates and attractive government incentives. It makes this city a great place to set up your business. However, when manufacturing, selling, or distributing products, you need to be cautious of one risk—your company can be held liable if your products lead to problems down the line.
Given this significant risk, it will be helpful to get product liability insurance coverage to provide financial protection to your business. Get to know more about this policy and how much it costs, so you can quickly browse through the business liability insurance quotes in Calgary provides.
What is Product Liability Insurance?
Product liability insurance protects your Calgary business from claims that your product is defective or caused property damage or bodily injury to a third party. In such cases, you may have to shoulder medical expenses, legal fees, property repairs, and other costs related to product defects.
Even if you do not manufacture the products, you may still be held liable for these potential defects. So aside from manufacturers, other parties benefiting from product liability insurance include wholesalers, retailers, distributors, online sellers, restaurants, clothing stores, and others.
These claims can put a substantial financial burden on small businesses, so an insurance policy can help you pay these costs and protect your bottom line. Specifically, product liability insurance covers the following defects:
● Design Defect – faulty or unsafe product design (negligent design)
● Manufacturing Defect – problems that occur during manufacturing (negligent manufacture)
● Marketing Defect – improper instructions, incorrect labeling, or other marketing issues (negligent failure to warn)
Conversely, the insurance policy does not cover warranty, product recalls and replacements, professional negligence, or industry fines.
Why Get Product Liability Insurance Coverage?
Initially, you may think that product liability insurance will be useless if your business follows proper standards and has strict quality control measures. However, you never know what may happen. Even with the most careful practices, mistakes may still occur at any stage of the product development chain. Unfortunately, one mistake can lead to major consequences.
Ultimately product liability insurance provides your business with a safety net—a “just in case,” if you will.
Cost of Product Liability Insurance
Like other insurance policies, product liability insurance rates are calculated on a case-to-case basis. Generally, the degree of risk associated with your product will determine how much you pay for your policy. Some key factors that insurance companies look at include:
● Industry
● Company Size
● Type of Product
● Quantity of Products Sold
● Business Revenue
● Product Liability Claims History
To give you a rough estimate, you can expect your annual insurance rates to cost around $0.25 for every $100 sales. But again, this is highly variable, so it will be best to shop around and compare business liability insurance quotes in Calgary from different companies. Make sure you carefully review each policy to verify the cost, coverage, and inclusions.
Overall, product liability insurance is a valuable investment for product-based businesses in Calgary. However, regardless of your industry or product, you can never guarantee that your products will have zero problems 100% of the time. Once you start shopping for policies, remember to explore your options first to understand what coverage you can get from different insurance companies.
