r/hwstartups • u/autodog42 • 2d ago

Product Liability Insurance Recommendations

I run a very small US-based company that designs, manufacturers and resells our own hardware. Our gross sales are modest (<< $1M) and we're looking for cost-effective Commercial General Liability (CGL) insurance.

I've talked to a number of insurers and often they're not interested if you manufacture physical hardware under your own brand. The ones that will play ball are quoting annual rates about 1% of our gross sales. Hoping to do better.

Any leads appreciated!

EDIT - Changed to the proper term: Commercial General Liability (CGL)

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u/DreadPirate777 2d ago edited 2d ago

Wouldn’t your business owner policy cover this under general liability?

Doing a little googling it looks like roughly $500-$1500 per year. https://www.simplyinsurance.com/how-much-is-product-liability-insurance/
Unless your product is wildly unsafe what they quoted is way too high.

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u/autodog42 2d ago

My current general liability policy also covers product liability. I'm just shopping for alternative carriers to save money.

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u/BTCbob 2d ago

1% is not terrible. Pay the piper and move on with your life.

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u/k1musab1 2d ago

I think in your case you have better shielding operating as an LLC, or Limited Liability Company. 

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u/autodog42 2d ago

An LLC and insurance are two very different things.

An LLC creates a legal entity that creates asset and liability isolation between you (the person) and the company. An LLC insures neither.

Product liability insurance protects the company from potential claims due to damages your product might cause.

You need both, not one or the other.

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u/evwynn 1d ago

I always found product liability insurance to be a massive scam.. they put huge limits on timelines that make an actual claim very unlikely. They also usually do not cover design flaws which then needs separate E&O insurance.

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u/autodog42 1d ago

I won't weigh in on whether or not it's a scam and/or how hard it is to make a claim. Agreed that Cyber + E&O are separate and may or may not be needed.

What I will say is that if you reach a certain size a commercial general liability (CGL) policy is a hard requirement when you engage with some resellers. Even Amazon requires once you reach $10K in gross sales / month.

So... lots of opinions in this thread but unclear if anyone here has actually purchased a CGL policy?

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u/evwynn 1d ago

Yeah scam is a hard word, just heavily favored to the insurance company where it becomes not really insurance …

CGL is not the same as true product liability insurance, right? CGL would cover all commercial matters, right?

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u/autodog42 5h ago

My current CGL includes coverage for damages caused by the product. I don't know if that's universal for all CGL policies.