Why Industrial Design Services Need Insurance
Industrial design services solve problems by fixing or creating a new product to fulfill a need. No matter what design services you provide – automobile, furniture, hand tool, or building – you are important to our future.
Managing an industrial design services business comes with a list of responsibilities. One of your responsibilities is buying the right insurance, as it can be critical to protecting your business and assets from the risks you face every day.
Risks that industrial design services face include:
- Mistakes or Oversights on a Project: A great amount of detail goes into design projects, and occasionally something can go wrong. Maybe you inaccurately estimate the time it will take to complete a project or your designer misses an important safety consideration. In either case, customers can hold you liable for damages.
- Employee Theft or Crime: Industrial design services companies see plenty of innovative ideas and rely on employees to bring these to life. What happens when your employee steals an idea or design and shares it with a competitor?
- Electronic Data Loss: The majority of projects are designed on computers using specialty software. If these files are destroyed by a computer virus or fire, you have to start from square one. How do you cover the loss of income?
- Property Loss: Property losses extend to more than just your building. Think about the computers, equipment, and tools you use daily, what happens if they are stolen or destroyed in a fire?
- Hackers: Since the majority of your initial design work is completed on a computer, you risk having it stolen or compromised by hackers.
This is a limited list of risks you face, and some are more likely than others, depending on how you operate. If you don’t have the right insurance in place, you risk losing your business, your assets, and the reputation you’ve worked hard to build.
What Types of Coverage do You Need?
There are many insurance policies available for industrial design services companies. The specific services you offer impact which coverages you need to buy.
If you solely consult on design services and have no employees, you will likely need general, professional, and cyber liability. If you are more involved in the design steps, you still need these along with some additional policies.
- General Liability: Mainly pays medical expenses and costs associated with visitors injuring themselves (or their possessions) on your property or job site. It also includes coverage for electronic data loss in the event you experience lost income from destroyed files.
- Professional Liability: Also referred to Errors and Omissions (E&O) or design liability insurance. This pays for damages resulting from project oversights and mistakes you are held liable for.
- Crime: Protects you from expenses associated with theft of money or property.
- Commercial Property: Pays to rebuild or fix damage to your property including the building and its contents. Some property or business owner’s policies also include coverage for loss of business income which reimburses your expenses and lost revenue if you have to close temporarily.
- Cyber Liability: Pays expenses associated with cyber breaches including negotiating, notification, and lost income.
Cost of Insurance for Industrial Design Services
The cost of industrial design services insurance varies depending on the insurance carrier and a few additional business factors. How long have you been in business? Do you offer consulting services? What type of design services do you offer? A business that designs vehicles faces more risk than one that designs furniture. Request a quote for industrial design services insurance below and review your coverage options.
What type of insurance does this industry need?
- General Liability: This policy protects your business in case of third party claims, such as bodily injury or property damage. For example, the common "slip-and-fall" claim would be covered by your General Liability policy. General Liability insurance is often considered to be the core coverage, particularly for businesses that regularly physically interact with customers or sell physical goods. In addition, many businesses have a contract, like a loan or a lease, requiring that they have this coverage.
- Professional Liability: This policy, common in the professional services industry, helps to protect your business if a client believes they've suffered a loss due to a mistake or error made in a professional capacity. Your business may have contracts with clients or partners that require Professional Liability coverage, provide a "warranty or guarantee," or have clauses that require you to "indemnify or hold harmless" your clients. If so, Professional Liability coverage is often recommended. This coverage is also commonly recommended for any businesses providing advice related to legal or financial matters.
- Commercial Property: This policy protects the business's physical assets and is appropriate whether you own or lease your space. Keep in mind that this policy will only offer protection in the case of covered events. If you need protection for certain scenarios, such as floods or earthquakes, you may need additional coverage. If you have a mortgage or a lease, you may be required to have property insurance. Even if you are not, this is the best way to protect the building you are in and the business property you have in case of a natural disaster or some other accident.
- Errors & Omissions (E&O): This policy, common in the professional services industry, helps to protect your business if a client believes they've suffered a loss due to an error or omission on your part. Your business may have contracts with clients or partners that require E&O coverage, provide a "warranty or guarantee," or have clauses that require you to "indemnify or hold harmless" your clients. If so, E&O coverage is often recommended. This coverage is also commonly recommended for any businesses providing advice related to legal or financial matters.
- Hired & Non-Owned Auto: This insurance protects the business in the case of any incidents involving a vehicle that has been hired by the company to be used for business-related purposes. It also provides coverage in the case your business uses other vehicles which are not property of the business, such as having delivery drivers use their own vehicles. If your company hires vehicles or allows employees to use their own vehicles for business purposes, you will want to consider this insurance.
- Workers Compensation: Workers Compensation covers an employee's lost wages and the cost of resulting medical treatment if they suffer a work-related injury or disease. It also covers services needed to help the employee recover and return to work. Workers Compensation coverage is mandatory in most states. The number of employees after which it's required differs by state, but you will generally need coverage once you have employees.
