Who’s Responsible if My Skincare Products Give a Customer a Rash?

(Find out whose and which insurance would cover the damages.)

Skin rash

When running a business, it’s important to keep the safety of your customers in mind as a top priority. Sometimes, even chemical-free products can cause adverse reactions, and business owners need to be prepared to deal with the consequences from a coverage standpoint. So what happens if your side business’s all-natural skincare products give a customer a rash? Who’s responsible for this mess, anyway?

Luckily an independent insurance agent can not only answer this question for you but also help you get set up with the proper coverage. Independent insurance agents have handled all kinds of claims, so they know exactly what kind of protection you need, and they’ll get you covered long before it’s ever time to file a claim. Here’s how they’d help you get coverage against a customer breaking out in a rash after using your business’s all-natural skincare products.

Who’s Responsible if My Side Business’s All-Natural Skincare Products Give a Customer a Rash?

Regardless of what ingredients are in the product, the business is responsible for the health and safety of its customers, as far as any products it manufactures and sells. Though your side business would be held responsible for the incident, in order for the customer to have a case against you, they’d have to be able to prove for certain that it was your products that caused their rash. With adequate proof, they’d be able to sue you.

If it’s All on Me, Which Insurance Would Cover This Incident?

Well, if it was your side business that made the all-natural skincare products that caused the rash, the responsibility would fall back entirely on you. That’s why it’s so important to make sure your business, no matter how small, is set up with the proper coverage. You’d need to have adequate liability insurance in order to protect you in the event legal charges were brought against you for a customer’s adverse reaction.

How Would Liability Insurance Work in This Scenario?

Liability insurance is designed to protect business owners in the event they get sued. Coverage reimburses the policyholder for all legal expenses and fees, including hiring an attorney, court fees, and any settlements you might be ordered to pay if the case rules against you. Since lawsuits often get very expensive, it’s best to be set up with all the liability coverage you could possibly need long before you ever get hit with a legal charge.

Do I Need Umbrella Insurance?

You might. If the lawsuit against your side business gets especially costly, you might blow through the liability coverage limit under the commercial general liability section of your business insurance or business owner’s policy (BOP). Umbrella policies basically stack on top of another policy, such as business insurance, to increase your total liability coverage. Umbrella insurance can be purchased in $5 million or $10 million increments.

So, if your business insurance or BOP comes with a $1 million limit for liability coverage and you add a $10 million umbrella policy, your new limit for legal protection comes to a total of $11 million. Umbrella policies are often super affordable and offer valuable coverage for business owners. Your independent insurance agent can help you decide whether your side business would benefit from umbrella insurance.

What if I Don’t Have Insurance?

Well, you might be out of luck. Without liability coverage, you’d be left paying for all legal fees out of your own pocket, and attorneys alone can break the bank. Lawsuits have the power to bankrupt even giant corporations, so it’s not much of a stretch to think that it could happen to your small side business. Rather than find out the hard way if you end up in this situation, it’s best to just be proactive and get set up with adequate coverage to protect yourself in advance.

What Does a BOP Cover?

BOP insurance is essentially a package of coverages needed by all business owners. BOPs are finished off with specific coverages needed by an owner’s unique business, so you’d have to work together with your independent insurance agent to select all the types of protection your side business needs.

Standard coverages offered in BOPs include:

  • Business income: Covers financial losses suffered while a business is closed due to fire damage or other disasters.
  • Commercial general liability: Covers your business against property damage or bodily injury claims made by a third party.
  • Property damage: Covers loss of/damage to your physical property, including your office and inventory from hazards like fires, storms, vandalism, etc. Coverage often extends to permanent changes you make to the interior of a building as well, such as installing light fixtures.

Your independent insurance agent can make sure you assemble a BOP that covers all aspects of your side business from the start.

What Doesn’t a BOP Cover?

BOPs provide a lot of important coverage for business owners, but they don’t include everything. Your individual policy will have its own specific coverage exclusions, but the two major perils never included by BOPs are flood damage and earthquake damage. Special flood insurance and earth movement policies would be required to protect your business from damages or liabilities caused by these disasters.

Additionally, BOP insurance usually excludes the following coverages:

  • Workers’ compensation
  • Professional liability
  • Commercial/business auto
  • Health/disability

To get the protection your side business needs for professional errors/negligence, company vehicles, and any employees, work with your independent insurance agent to purchase separate policies to cover these important areas, if applicable.

Are There Any Additional Coverages I Should Consider for My Business?

Responsible business owners need to consider all areas where coverage could come in handy, no matter how small the business may be. Common add-on coverages take care of the most frequent types of business claims across the board.

Here are some optional common add-on coverages for businesses:

  • Professional liability:  AKA "errors and omissions insurance," coverage protects against claims made by clients who have suffered financial loss due to the work they've hired you for.
  • Boiler & machinery coverage: AKA "equipment insurance," coverage applies to electric equipment in the building (e.g., AC units and boilers) that breaks down due to power surges, etc.
  • Employee dishonesty coverage: Covers harm to the business caused by employees with questionable motives.
  • Crime coverage: Covers losses due to criminal activity such as theft or fraud. Coverage even applies to employees who steal from the company.
  • Glass breakage coverage: Covers the glass windowpane of your business’s storefront, where applicable, from things like vandalism and car crashes.
  • Druggist liability insurance: Covers liability exposures for professionals like pharmacists who have the potential to make costly mistakes, like giving someone the wrong prescription.
  • Hired and non-owned auto liability: If your employees drive to perform company operations but you don’t have company vehicles, you might need this coverage.

Your independent insurance agent can help you brainstorm all the areas in which your business is in need of additional coverage. The more complex your business, the more coverage it’ll require.

Here’s How an Independent Insurance Agent Would Help

When it comes to protecting your side business against getting sued for giving a customer a rash and all other strange incidents, no one’s better equipped to help than an independent insurance agent. Independent insurance agents search through multiple carriers to find providers for business insurance, BOPs and umbrella insurance. They can deliver quotes from a number of different sources and help you walk through them all to find the best blend of coverage and cost.

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TrustedChoice.com Article | Reviewed by Paul Martin

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