Any experiences, thoughts on this? Here's a link with some actual prices for specific products:
My understanding is that the rate is proportional to the number of sold units, which makes some sense. And of course to the type of product.
But here's one Q:
They talk about product liability protecting one's assets. I assume this would be corporate assets. But if the corporation has no real assets (say, is essentially designing the product for others to build and then distributing/selling sed product), what would happen if there was no product liability insurance? Could personal assets be gone after since there would essentially be no corporate assets? And then, how so, if the purpose of the corporate entity itself is to protect personal assets?
I know the corporate veil can be pierced (heh, Law and Order episodes), but is this one of those times, for inadequate or non existing product liability insurance?
1) How much the corporation has in assets
2) How much the person has in assets
3) How vicious the lawyer is
At least that is how it was explained to me. I do not carry product liability insurance. When I feel that there is a possibility that a product I am designing has the potential to do harm, I insist that, as a term of my contract, that the client names my company AND me personally as "additional insureds" on THEIR policy.
I was told -- by an only partially reliable source -- that not having adequate product liability insurance is a breach of fiduciary responsibility, and lets them reach through the corporate veil.
Check with yer law-yer. In a product liability case they'll name everyone even faintly related to the case, but if you're the one making it, designing it, or selling it, you have special reason to worry.
What is the point there? How many lawyers are going to waste their time if #1 and #2 don't have sizable assets?
There is an idea but what are their policy limits, exclusions, ect, ect, ect. Fine print stuff can get you creamed.
Nine or so years ago, I was approached to do design work I once performed when I was employed by a spun off subsidiary of a fortune 500 company. The thought of doing it for two guys running shoestring operation (former employees of the firm I used to work at) scared me off. I don't have a lot of assets but I have years of working life left. Remember Goldman dogging OJ's arse to get satisfaction? Judgements are forever. Maybe that is what you meant by vicious.
Once you turn something loose, you have no control over how it is used. I never was concerned when I worked at EP and ET because I was there to monitor things and correct anything that could be a safety consideration.
Contact a lawyer for advise. If you need any coaxing on whether you should have product liability or not do simple search for lawyers specializing in whatever field you are in. A search for "product liability lawyers" on two sites returns nearly 24,000,000 hits in less than .30 seconds.
( Courts can and do pierce the corporate veil of LLCs when some type of fraud or misrepresentation is involved, or under certain situations where the owner uses the company as an "alter ego." )
A lot of privately held corporations or LLCs are surprised to have their corporate veil pierced because owners/partners running the company treated the company assets like a private slush fund. For instance have the corporation or LLC buy a car, gas card and country club membership for the owner where it they aren't used 100% for company business and isn't claimed by the individual or the company as compensation to an individual and BAM, good lawyer will find it and kill you with it.
( Limited liability, meaning that the owners of the LLC, called "members," are protected from some or all liability for acts and debts of the LLC depending on state shield laws. )
You need to check each state you are selling to.
( Protection of personal assets. Safeguarding personal assets against the claims of creditors and lawsuits. Sole proprietors and general partners in a partnership are personally and jointly responsible for all the liabilities of a business such as loans, accounts payable, and legal judgments. In a corporation, however, stockholders, directors and officers typically are not liable for their company's debts and obligations. They are limited in liability to the amount they have invested in the corporation (eg: If $100 in stock was purchased, no more than $100 can be lost). Corporations and Limited Liability Companies (LLCs) may hold personal assets like real estate, cars or boats. If one is personally involved in a lawsuit or bankruptcy, these assets may be protected. A creditor of the owner of a corporation or LLC cannot seize the assets of the company; however, they can seize their ownership shares in the corporation, as that is considered a personal asset. )
In the United States, the most litigious country in the world, a products liability action may be brought, under state law, for express or implied breach of warranty, misrepresentation and negligence. Under the theory of strict liability, a lawsuit may be initiated on the grounds of manufacturing and design defects as well as poor and inadequate warning instructions. The best defensive strategy for a company to avoid becoming involved in any of the above is to manufacture the safest product possible within parameters of economic feasibility. If said manufacturer can vouch for safety factors in the design, production, testing, inspection and evaluation of its product as well as attentiveness to consumer complaints, it will be more likely to avoid litigation or at least be able to prevail in the courtroom. This paper will discuss the creation of a potentially safe product: the protocol involved in the development, prototype testing, engineering evaluation, hazard analysis, and the production of warnings and instructions. It will also emphasize the factors necessary to keep a company from becoming entangled in the legal system so that it can spend more money on product improvement, product safety and viability. )
Probably not. It was reported in AOPA (Aircraft Owners and Pilots Association) magazine and in Flying magazine, both longtime, respected publications in the industry. They'd have nothing to gain by publishing non-verifiable stories.
Another thing I do, on the advice of a lawyer, is include in the contract a disclaimer that basically says that we are delivering a "black box" and that it is up to the client to determine whether it suits his needs. We make no claim of any knowledge of the purpose of the device (for instance, we designed a fire detection device for coal mines in India, solely based on information provided by the client), and therefore are not in a position to determine the suitability of the design for any purpose.
This also is the basis for our warranty. We give the client 30 (or 60 or 90) days to show us that the delivered product does not meet their specifications. Not that it's not the widget that they wanted, but rather that it's not the widget that they ASKED for. In writing.
Fortunately, we've never had to (in over 25 years) test any of these provisions (yet).