Product Liability Insurance
Any company that produces a physical product needs to have product liability insurance. Whether you believe anybody could possibly hurt themselves with your product you need liability insurance. You can be certain that whether it seems possible or not somebody will figure out a way to hurt themselves with it. You can also rest assured that when that happens you are going to get sued. It is important that you have insurance to cover this because a lawsuit can ruin your business if you have to pay for out of your own pockets.
There are three different ways in which a company may be liable if somebody gets hurt using their product. It could be a manufacturing flaw, a design flaw or defective instructions. These are all pretty self explanatory but it is important to realize that you are likely to get sued even if no reasonable person would think that you were liable in one of these areas. Everybody has heard the stories of people winning ridiculous lawsuits like the guy who successfully sued Winnebago because the instructions for his motor home didn't explicitly tell him he couldn't set the cruise control and leave the driver's seat. These types of lawsuits do happen and people do win them and if it happens to your company you will be grateful that you have product liability insurance.
A lot of businesses think that if they don't actually manufacture the product they don't need product liability insurance, they do. Retailers, suppliers, even transportation companies need to have product liability insurance. In most states any company that played a role in getting the product into the consumers hand can be held liable. The normal practice of lawyers in these types of cases is to name everybody they possibly can and then whittle it down to the companies that are most likely to be found liable. Even if the lawsuit does get dropped simply being named is going to result in significant legal fees. Even worse there is a fairly good chance that you will in fact be found liable in which case you had better have enough product liability insurance.
The biggest factor in determining how much you pay for your product liability insurance is the type of product your company produces. Obviously some products are more likely to cause injury than others and that will be reflected in the cost of your insurance. The other major factor is how many products you sell. The more products that you sell the more likely it is that somebody will find a way to hurt themselves with it. Some companies try to get a lower rate on their product liability insurance by claiming lower sales than they actually make. This is not a good idea; if you get sued the insurance company it going to find out exactly how many products you sold and if you underreported your sales there will be some stiff penalties.