Are e-cigarettes and other products in the bustling e-cigarette market too risky for insurance carriers? A recent report by Insurance Business America suggests so.
When e-cigarettes and other electronic nicotine delivery devices emerged in the U.S. in 2007, insurance carriers eagerly embraced the new industry for its growth potential and promising revenue source. But as e-cigarettes exploded, causing serious burn injuries and other harm to consumers, “the great fire of interest quickly whittled down to a few smoldering embers,” Insurance Business America reported.
Although other factors have played a role, the risk of e-cigarette explosions and serious physical injuries seem to be the driving factor behind the refusal of some insurance carriers to provide e-cigarette industry coverage.
Last month, a 38-year-old St. Petersburg, Florida man became the first known person to die from an e-cigarette blast. The exploding device caused a fatal projectile wound to his head and burn injuries to his body, police investigators said.
While there is no easy way to quantify the number of e-cigarette related injuries, the number is likely to be in the hundreds annually as many hospitals and burn care centers report treating a few cases each year. And insurers have taken notice.
According to Insurance Business America, “Product liability insurance is also key for smoke and e-cig shop owners. The stories may sound like revved up media scandals, but the fact of the matter is, e-cigarettes have been known to overheat and explode, particularly if they contain faulty batteries.”
One insurance underwriter that does provide coverage to businesses in the e-cigarette industry told Insurance Business America that liability coverage is essential to survival. As Insurance Business explains:
The liability tends to fall heavily upon the distributors, making it vital for smoke and [e-cigarette] shop owners to consider product liability insurance. Those without product liability insurance could face potentially business-shattering claims.