If your business deals with consumer products in any way, then you are expected to deliver safe and reliable products to the consumer. However, if you fail to deliver on these expectations, then this can have dire financial consequences on your company. Suppose the use of any of your products causes bodily harm or property damage to a consumer. In that case, the said consumer can sue your business, which can lead to very expensive legal fees and settlements. While the product manufacturer is often the party that is held responsible, any business involved in the chain of commerce can be held liable, from the manufacturer, supplier, distributor, wholesaler, to the retailer. In some cases, this also applies to repairers.

Despite all your best efforts to ensure that your product is safe, accidents still do happen. This is why it is always crucial to ensure that you have sufficient protection in place against any arising lawsuits. This is where product liability insurance comes in. Product liability insurance is designed to protect your business against claims arising from bodily harm or property damage caused by a product that you’ve sold. Thus, this type of insurance helps to provide your business with a financial safety net and ensures that it continues to prosper even in the face of legal troubles.

What Does Product Liability Insurance Cover?

Product liability insurance helps to pay for the legal fees and compensation costs that arise when a consumer sues your business for injury or property damage. Any business that manufactures, sells, transports, or repairs the product can be named in the personal injury claim. You can find yourself dealing with a personal injury claim long after the product has left your facility. Remember that your business can be held liable in instances where the manufacturer can not be traced.

What Type of Claims Does Product Liability Cover?

Just like any other type of insurance policy, the types of claims covered by certain a product liability policy are stipulated by the policy’s terms and conditions. However, even with the most basic product liability policy, you should expect protection from claims arising from:

– Manufacturing or Production Flaws: This relates to product safety issues that arose while the product was being manufactured.

– Design Flaws: A product may possess a safety issue even before it hits production. The product may have problems with its overall design, which may be hard to detect even after trial runs and product testing. This means that these problems may arise long after the production of the product.

– Instruction or Warning Deficiencies: These are claims that arise from the lack of adequate warning information to alert the user on the potential dangers of the product. This also applies when your business fails to supply enough instruction information, which leads to harm or property damage. For example, if a drug manufacturing company fails to indicate that using a particular drug with another common drug can cause severe side effects, then that company may be held liable.
While this may be unintentional or an overlooked aspect, it may lead to significant charges against your company. However, having product liability insurance will help to mitigate the overall financial losses resulting from such charges.

– Strict Liability: These are claims that arise where injury or property damage happened from the proper use of the product, but there is an absence of negligence.

Is Product Liability Insurance A Legal Requirement?

While having a product liability insurance policy isn’t required by the law, other businesses involved in the chain of commerce will require you to have one before doing business with your company. Thus, not only does having product insurance help protect your business, but it also helps you to maintain good business relationships with your partners.

Why Your Business Needs Product Liability Insurance

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