Tips and Tricks All Innovators Should Know About Insuring Their New Products

Tips and Tricks All Innovators Should Know About Insuring Their New Products

Innovation is key to the success of any business. If you’re not constantly coming up with new products or services, your competition will leave you in the dust. While it’s certainly important to be innovative, protecting your new ideas is also essential. That’s where product liability insurance comes in. This article will discuss tips and tricks all innovators should know about insuring their new products.

Know Why You Need Product Insurance

Many startups don’t even consider having a product insurance policy in place. They figure they’re not going to have a problem with their new product launch and that everything will go off without a hitch or, at least, that’s what they hope for. Entrepreneurs should think about insurance from the beginning of the business planning process.

Some states require all startups to maintain certain types of coverage before moving forward with their plans. In other cases, you might be required to buy an insurance policy if your business does not meet state licensing requirements or if you cannot prove sufficient capital reserves or working capital for your company. These “qualifying” policies function much like a deposit toward any future claims made against your startup.

Get to Know Your Product Liability Insurance Provider

Your product liability insurance provider is not only there to help you if your new products cause injuries. They’re also there to help you safeguard yourself against lawsuits. That is why you need to go to where they will ensure you know everything that your product liability insurance covers and doesn’t cover before you buy a policy. For example, some policies only cover products sold in the United States. Ensure your product is covered everywhere you might sell before signing on the dotted line.

Know What’s Covered By Your Policy

Simply put, product liability insurance covers claims made by consumers who are injured by defective or dangerous products. If someone misuses your products or isn’t careful while using one of your products, for example, they could claim injury because of how the product was designed.

Be aware that some companies will try to take advantage of this situation and file a claim against your business even if the injuries had nothing to do with the way your product was designed.

Understand What Product Liability Insurance Cover

Under a product liability insurance policy, you are covered for claims involving personal or property damage resulting from the sale of your goods and services. These claims can be related to the product’s defective design, manufacture, or warnings.

To better understand how product liability insurance works, let’s say someone is injured when using your new machine that mixes beverages. They file a claim against you and are awarded medical expenses, pain and suffering, lost wages, and court costs. You would be personally responsible for paying all these costs without adequate product liability coverage.

A product liability insurance policy provides the best protection possible from dangerous products, but it’s not always an easy line to toe. Ensure you understand all terms and conditions before signing on the dotted line, or else your company could find itself in a sticky situation later down the road.