Product Liability Insurance

[terri46355]

I posted this question in the Market Garden forum, but thought this might be a good place, too.

I plan on joining the local farmers' market. They have liability insurance for the grounds, but don't have product liability insurance (PLI). I fear that some lawsuit crazy person could take everything I own because they claim they got sick eating my produce.

My homeowner's insurance doesn't offer PLI. Where do you get product liability insurance to cover the incident where someone says they got sick eating your produce? How much does it cost?

Would it be wiser to register as a LLC than to purchase PLI?

[lharvey]

Funny you should post this at this time

Well not funny,

I am starting a new business and I have a couple of contracts already. One of them however wants proof of Errors and Omissions Insurance (liability).

So the quest began, I've made like a gazillion calls trying to find E&O insurance. I finally found, just today, a company that would write that insurance.

Hold onto your hat, for one year it is $2100.00. I think the price is high because they don't understand the services that I am offering.

I can't tell you if it would be better as a LLC. My new company is a LLC and the client still required it.

[terri46355]

Originally Posted by lharvey

Funny you should post this at this time.
Well not funny,
Hold onto your hat, for one year it is $2100.00.

Womw!!! I would end up losing money just to have insurance!
As my husband says, "If it wasn't for insurance and taxes, we'd be doing okay".

[foxtrapper]

Even with insurance, you're running a risk. It's very easy for the insurance company to step aside by merely claiming you sold an unsafe product in violation of your insurance terms.

Carrying a large juicy insurance policy just makes you a tempting target of the vultures and parasites. Especially if you brag about it. Why sue Jimmy who's worth about $2k when Bobby's got a 2.5M insurance policy? Since you can sue everyone but only collect from one, you go after the deep pockets, and with a big policy, it's your pocket that's the deep one.

You'd do better establishing a LLC or sub-chapter S corporation for the product liability shield. BUT... most people pierce that veil by how they conduct business, negating the shield. It also requires a fair bit of paperwork and costs money.

So, most sell produce and such and hope they never get sued, and hope that if they get sued that they can defeat it in court without going bankrupt in the process.

That $2k a year for $2M a year protection sounds about right. It's what my wife was paying as I recall.