FEDERAL. part2

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LIABILITY INSURANCE

In general, the cost of liability insurance is affordable for the small business: $100,000 liability insurance for a person doing up to $10,000 of business a year will cost about $100 annually, although rates will vary from region to region. Craftspeople should consult their insurance brokers or agents to determme the rates in their own particular areas. Each craftsperson must then evaluate this cost against the risks of a law suit. You should know that the majority of these suits are settled for, or are litigated to a judgment of, over $100,000. You can deduct the cost of this kind of insurance as a business expense for tax purposes. Given these factors, you should, if there is any reasonable expectation that a purchaser of your product could sustain personal injury from it, seriously consider obtaining product liability insurance.

The area of product liability has evolved to a point where manufacturers are being held liable for injuries caused by their defective products. The doctrines appear to have с v.lived with an eye to the large manufacturer of a mass-produced item, but the rules are applied with the same vigor to the craftsmaker creating a unique piece. It is therefore important to be aware of the potential risks involved and to take the necessary precautions.

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