Product liability is a must-have for any business involved in the high-risk cannabis industry. With recreational cannabis now legal in 10 states and medical cannabis legal in 33, insurance companies are seeing a rapid increase in cannabis-related product liability claims and lawsuits. Product liability insurance can help keep cannabis dispensaries safe from claims of personal injury or property damage caused by products sold or supplied through your business. Learn more about product liability insurance, what it covers, and why you should speak to professional cannabis insurance brokers about applying for a policy.
What Is Product Liability Insurance?
No matter how hard a business works to ensure that they are supplying high-quality products, there is always a chance that the product could fail. For example, a cannabis dispensary could sell a product that triggers an allergic reaction in a customer. Due to this potential for defects, businesses that provide any type of product should have product liability .
Product liability insurance essentially protects businesses from the consequences that could develop if a product caused injury or damage to a third party. Customers may become harmed by how a product is designed, misused, manufactured, or marketed.
What Is the Cost of Product Liability Insurance?
A product liability insurance policy generally covers any type of compensation case that is brought against a product for damage, loss, or injury. Having an insurance policy will help protect your business from legal costs that you may be found responsible for due to a claim.
While situations may vary, product liability typically covers bodily injury in the event that a person is wrongfully injured by your product, as well as property damage if property is damaged due your product. Insurance may cover the cost of associated medical bills, lost wages, repairs, restitution for death, and legal fees.
How Does Product Liability Insurance Work?
As a business, you are responsible for the safety of every product you sell. Fortunately, product liability insurance can help cover claims relating to manufacturing or production flaws, defective warnings, design defects, and similar issues.
If you have product liability insurance and face a product-related claim, it is important to contact your insurance company right away to see if the claim is covered. Certain types of claims are not covered by product liability insurance, including slip-and-fall accidents, product recall costs, employee injuries, lost inventory, damage to your products, or professional liabilities.
What are the Benefits of Product Liability Insurance?
Product liability law holds certain types of businesses legally accountable for damages caused by defective products. When lawsuits develop, your business could be left paying tens of thousands or even millions of dollars in damages. Product liability insurance functions as a risk management strategy to protect your business and assets against the potential dangers of product defects.
However, protecting your finances is not the only reason to invest in product liability insurance. You also want to protect the members of your team from lawsuits that they may be involved in.
How Much Does Product Liability Insurance Cost?
There are a number of factors that are considered when determining the price of a product liability policy. However, as a general rule of thumb, the riskier the product, the more expensive the insurance.
For businesses in the cannabis business, you can expect to pay more for a product liability policy than other lower risk businesses. Generally, an insurance company will complete a comprehensive risk analysis of your business to come up with the recommendations for liability coverage.
The insurance company will also take other things into consideration when determining a policy price, such as how many products are distributed and sold, what is the use of these products, and who the user of the product is. An insurance company may also consider the intended lifespan of the product, how the product is packaged, what the product is made out of, and if there are any guarantees or warranties sold with the product.
A look at the instructions provided with the product can also help an insurance company determine the amount of risk exposure. However, no two businesses are exactly alike and it is up to the insurance company to compare and contrast companies.
Contact Cannabis Insurance Brokers
While you never expect for a customer to file a lawsuit based on injuries or damages caused by a product you provide, there is always a risk. As you are responsible for the safety of any product that you sell, you could find yourself facing a hefty settlement if you go to court. Fortunately, having the right type of insurance can prevent you from suffering the financial consequences of a product-related claim. Speak to a cannabis insurance broker to learn more about product liability insurance or how to apply for a policy for your cannabis dispensary.