May 27, 2022
You’ve spent a lot of time and money on your products so that they will satisfy consumers. Don’t let that all go south when one defective product or a misinterpreted label goes wrong. If someone claims your product causes injury to their person or damages their property, then you could be held responsible for the bill.
Product liability insurance is an insurance policy that helps cover the cost of legal expenses in the event someone claims your product injured them or damages their property. Most businesses that sell, manufacture, or distribute products should have this insurance coverage under their belt. This policy covers defective products or products that aren’t labeled with enough warnings (for example peanut butter contains nuts). Even if it seems obvious if there isn’t a warning label your business could potentially lose the lawsuit.
Whether it’s a design defect or a manufacturer defect, a product liability claim is considered a strict liability. This means that the seller, manufacturer, and distributor are at fault for the person’s injury or property damage.
Product liability also covers contractors or construction workers for completed work and installation professionals who install a product in someone’s home. If they install something in the home that leads to the damage of something else (like a new refrigerator leak that causes water damage to the floor), then they will be covered under product liability insurance if they hold a policy. Depending on the claim, business owners could easily lose thousands of dollars or more if they didn’t have a product liability policy.
If you sell a product that doesn’t do as it promises (like a microwave that promises to turn potatoes into gold nuggets—it’s impossible) then it will not be covered under product liability insurance.
You never know when a product could be defective, so it’s better to be safe than sorry and purchase a product liability plan. Some insurers bundle it along with general liability or a business owner’s policy (BOP), but you should always double-check and make sure that you have this coverage before selling or installing any products. Most BOPs provide property, general liability, and business income coverages in one plan.
General liability policies cover your business from claims of bodily injury, property damage, or personal injury (like slander). This doesn’t cover the products or services that your business sells or provides. It typically covers scenarios like someone slipping on a wet floor or a ceiling tile falling on them. If someone bought something from your store and it caused them harm outside of the store, then you would need product liability coverage to ensure you’re covered from any claims they may make.
While product liability insurance isn’t required for businesses to operate, not having it could lead to a major monetary loss that shuts down the business. Reach out to your local insurance agent to ask about a product liability insurance quote for your business today!