Product Liability Insurance Protects Your Business

Customers expect businesses to sell safe and reliable products. As a business owner, failing to meet this expectation can lead to huge financial losses for your operation. Many business owners don’t realize that they need liability insurance. But, the truth is that any business involved in bringing a product to market can be sued for product liability. If one of your products harms a customer in any way, they can sue your business. Lawsuits like these can lead to hefty legal fees. While you can do everything in your power to ensure your products are safe, sometimes it isn’t enough to prevent it. Accidents can occur that can cause extensive damage to your business. Fortunately for you, product liability insurance coverage is available, and it can help protect your business against claims.


Product Liability Insurance Coverage

Let’s take a closer look at what product liability insurance coverage offers to see how it could benefit your business.

Coverage for manufacturing or production flaws

Sometimes a product flaw originates in the manufacturing process. For example, manufacturing or production flaws can include using the wrong part in a product, assembling a product incorrectly, or even allowing a product to be contaminated with an unintended ingredient. As a manufacturer or seller you can be held liable for placing a defective product into the hands of a consumer. Product liability insurance can provide protection against defective products.

Protection against design defects

A design defect implies that an issue was present in a product before it was even made. A design defect suggests that the design of the product is unsafe or faulty in some way. Even after product testing and trial runs, dangerous defects can still appear in products. Sometimes, this happens even long after production. For example, a design defect could include a chair that falls over when a person sits in it due to uneven chair leg length. Product liability insurance provides coverage for design defects and errors that make goods unsafe for use by the public.

Failure to warn

Failing to provide proper defect warnings or instructions for using a product can lead to a lawsuit. Claims can arise when products are not properly labelled or when products have warnings that do not reduce consumer risks while using the product. A company can be sued if there is a failure to warn defect on a product. As an example, a children’s toy that poses a choking hazard for children under 3, but that comes without a choking hazard warning. Product liability insurance helps organizations prepare for and litigate these types of claims.

Supplemental Commercial General Liability (CGL) coverage

Supplemental insurance is extra or additional insurance. It can help you pay for services and out-of-pocket expenses that your regular insurance does not cover. You may wish to purchase supplemental commercial general liability coverage and generally, there is some liability coverage for products available under a CGL policy. However, the CGL coverage available might not be enough to adequately protect your business. Product liability policies work alongside CGL coverage, providing protection against losses caused by malfunctions or defects in your products.



Learn More About Product Liability Insurance

Product liability insurance is necessary for almost any business that sells or manufactures products. For instance, designers, manufacturers, wholesale distributors and retailers can all benefit from product liability insurance. As a business owner, managing your product liability risk can be a great undertaking, even if you have access to all of the right resources. To supplement your risk management strategies and address specific exposures, speak with a qualified insurance broker to review your insurance coverage.


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