Insurance for Toy Companies, toy market, best toy store Hong Kong

People worldwide have begun to purchase their Christmas gifts for the very near festive season. It has been a tradition since the 19th century and is a great way to spread joy. Children enjoy the Christmas gift tradition the most, especially when they are gifted toys on their Santa wish list.

It is a beautiful moment when a child gets to rip off the wrapping paper and get excited about their new toy. These moments are only possible due to the innovative toy companies that design, manufacture and distribute various toys.

During the festive season, toy sales typically increase (depending on the economic status). With the increase in demand and sales, there is also an increase in risks. Every well-known toy brand has more customers purchasing their toys, which means there is more chance of errors, negligence or false allegations.

Toy companies understand they are making products for children and must be careful every product is safe. However, mistakes happen and can lead to hefty lawsuits.

Hence, insurance for toy companies is crucial worldwide to cover their liability and many other risks that may arise during this festive season.

Essential Insurance for Toy Companies

Product Liability Insurance

toy industry, insurance products, products liability claim

The primary purpose of toy companies is to create products for children’s entertainment. Although, there are several specifications that the toy industry has to follow to ensure the product is safe and for the right target market. Each toy has a specific age group it is intended for, or at least a minimum age the user must be.

The toys must be safe and user-friendly. However, there is always a chance of design or manufacturing negligence that leads to defects in the final product(s). The defect could seriously injure the child/customer (third party) or cause property damage.

For instance, the famous toy brand Mattel was sued and fined $ 2.3 million because millions of Barbies had lead paint. Lead paint in toys can be highly toxic to humans, especially children who may put their toys near their eyes or mouth.

Product defects could include design defects, manufacturing defects or failure to warn. Product liability insurance for toy companies is vital to cover such defect cases. The insurance will financially cover claims due to product defects that have caused third-party injuries or property damage. The cover will include legal, compensation and settlement costs related to the defect case.

All toy companies designing, manufacturing, or selling toys must purchase product liability insurance.

Product Recall Insurance

A toy company must inspect the entire batch if it faces a product defect claim. The company will discover whether the product defect was just that one product or the entire batch. 

toy product defect, toy industry,

If the whole batch is defective, the toy company must quickly recall every unit before it causes more injuries or property damage. Reasons leading to mass product defects and recalls include lack of testing, design or manufacturing defects. 

It can be an extremely costly procedure due to logistics, communication and public relations expenditures. For example, Hasbro, recalled a million of their Easy-Bake Ovens product because it burned children’s fingers. The product recall cost US $10.4 million and drastically hurt their stocks.

The toy industry must understand that product liability insurance will not cover product recall expenses. Hence, product recall insurance for toy companies is the ideal extension. The insurance will cover the costs related to recalling large amounts of products. The cost coverage includes logistics, informing the public, and public relations costs. 

Product recalls can be complicated, and a recall policy is the ideal insurance to deal with such situations.

Public Liability Insurance

toy store insurance, Hong Kong toys, toys hk,

Going to a toy store can be magical for children and is sometimes preferred over online stores. Toy stores can be toy retailers like Toys R Us or a brand store like Lego. Either way, running a physical store comes with risks and claims.

As magical as a toy store may seem, accidents are always possible and do occur. These accidents could be injuries or property damage due to the premises or business activity. The risk of these accidents increases during the festive times due to increased customers.

The injuries could occur if a customer slips or trips over a toy on the floor or a heavy toy falls on a child due to high shelves. These incidents can cause severe injuries and damage, resulting in parents or affected parties suing the store and business. 

Even if it is or isn’t the toy company’s fault, they will be held liable for everything that occurs in the toy store. Public liability insurance for toy companies is the best cover for public liability claims. The insurance will cover third-party injuries or property damage claims resulting from the business premises or activity. 

Public liability incidents can occur in any toy store, small or big; therefore, insurance is necessary.

Property All-Risk Insurance

Every toy company has essential business assets that help run the business. These assets mainly include the manufacturing equipment, products and physical store fixtures. Companies try to protect their assets, but some incidents can lead to costly property damage.

insurance for toys, toy company, toys Hong Kong

The incidents could be due to natural disasters, freak fires, floods, etc. The business will be responsible for repairing and replacing and will have to deal with the financial loss. Business property damage can seriously harm a business’s financial status and future.

For example, the Toys R Us roof collapsed due to heavy rain, destroying the store and thousands of products. Thankfully, there were no life-threatening injuries, and the minor injuries were compensated. Such incidents could occur at any point and to any company.

Property all-risk insurance for toy companies is vital to protect business property. The insurance will cover the cost of repair or replacement to help the business recover. Property repair can sometimes interrupt the business; companies can purchase business interruption insurance.

Business interruption insurance will cover the income loss and outgoing costs while the business is recovering from property damage. Both insurance can be beneficial for toy stores and toy manufacturers. 

Cyber Insurance 

Cyber insurance for toy company, Toys online, online toy shop

Customers can purchase toys in physical stores and online stores. Online shopping is a big part of the festive season. It’s a faster and more efficient option for busy parents. E-commerce toy companies will notice an increase in traffic and sales during the season. With more online traffic, there is a higher chance of cyber-attacks.

Cybercriminals understand that when there are more sales, there will be more credit cards saved as data and more customer information. The volume of data makes toy companies the ideal company to attack during the holiday season.

For example, the children’s technology toy company VTech was hacked and suffered a huge data breach. The hackers stole 4.8 million customer’s sensitive data, including information about children and their parents.

Cyber insurance for toy companies is vital to cover the risk of cyber-attacks. The insurance will cover cyber experts’ advice, threat removal, data recovery, ransom payments, informing third parties and financial loss. Cyber-attack recovery can be incredibly costly, and having insurance is the best way to deal with unforeseen attacks.

Benefits Of Having Proper Insurance for Toy Companies

Insurance for toy companies is vital, especially during the festive season. Toy companies always need adequate protection to keep spreading joy during Christmas. There is no Christmas without toys.

Toy companies need a combination of insurance to protect against the range of risks that may occur throughout the year. The main benefit of having proper insurance is financial protection. Even if affected by any business risks, insurance will help deal with them and recover without a bankrupting financial loss.

In addition, having insurance provides benefits even before being affected by a claim or attack. The business will understand that they are protected during business operations. The peace of mind can help companies focus on creating the best entertaining toys rather than stress about unpredictable claims.

The multiple insurance for toy companies is the perfect protection during the busy season.

 

To Learn More about toy insurance and protect your toy company, contact Red Asia Insurance.