Product Liability Insurance Claim Risks can destroy your business. Product Liability Insurance can provide protection against claims arising your products. If you are a manufacturer, wholesaler, or retailer, you need product liability insurance to safeguard your business from potential lawsuits.
What is Product Liability Insurance?
Product liability insurance is a type of insurance coverage that protects businesses against claims resulting from the use of their products. It covers the cost of legal fees, settlements, and judgments if a product you manufacture, distribute, or sell causes injury or property damage to a third party.
Why is Product Liability Insurance Important?
Product liability insurance is essential because it helps businesses manage the risks associated with the products they sell. Even the most well-designed and tested products can cause harm to consumers, and when that happens, businesses may be held liable for the resulting damages.
Without product liability insurance, businesses may have to pay out-of-pocket for the cost of legal defense, settlements, and judgments, which can be financially devastating. Product liability insurance can help protect your business from these risks, giving you peace of mind and allowing you to focus on your core business activities.
What Does Product Liability Insurance Cover?
Types of Product Liability Insurance Claim Risks
There are several types of product liability claims. Just because these can be claimed or you may be sued for them, does not mean that you will necessarily be covered. Click here to read: What does product liability insurance not cover?
Manufacturing or Production Flaws.
This type of claim arises when a product is defective due to a problem that occurred during the manufacturing or production process. For example, a manufacturer may fail to properly assemble a product, leading to a defect that causes harm to a consumer.
Design Defects
This type of claim arises when a product is inherently flawed due to its design. For example, a product may be designed in a way that makes it unsafe to use, even if it is manufactured correctly.
Failure to Warn
This type of claim arises when a product does not include adequate warnings or instructions, leading to injury or property damage. For example, a product may not include a warning about potential hazards or may not provide clear instructions for safe use.
Breach of Warranty
These claims arise when the product fails to perform as promised or does not meet the standards set by the manufacturer or seller. This can include both express warranties, which are explicitly stated by the manufacturer or seller, and implied warranties, which are assumed by law.
Marketing Defects
These claims arise when the product is marketed or advertised in a way that misrepresents its safety or intended use. This can include false or misleading labeling, inadequate instructions, or misleading advertising.
Intellectual Property Theft
These claims stem from a another entity claiming that you have stolen their intellectual property. These may be related to a patent claim, use of a trademark on your product, or copyright in the marketing of your product.
Product liability insurance also typically covers the cost of legal fees, settlements, and judgments associated with these types of claims.
What are some common types of Product Liability Insurance Claim Risks?
Product liability insurance claims can arise from a wide range of products and situations. However, there are some common types of product liability insurance claims that businesses often face. The following are some of the most common types of product liability insurance claims:
Defective Automobiles: Claims arising from defective automobiles are common and can include issues such as brake failure, defective airbags, or faulty steering systems.
Defective Consumer Products: Claims arising from defective consumer products, such as appliances, power tools, and electronics, are also common. These claims can include issues such as electrical fires, malfunctioning parts, or dangerous design flaws.
Defective Pharmaceuticals: Claims arising from defective pharmaceuticals can include issues such as dangerous side effects, ineffective medications, or improper labeling.
Defective Medical Devices: Claims arising from defective medical devices can include issues such as defective hip implants, faulty pacemakers, or malfunctioning surgical tools.
Food Contamination: Claims arising from food contamination can include issues such as food poisoning, foreign objects in food, or inadequate labeling of allergens.
Toxic Chemicals: Claims arising from exposure to toxic chemicals can include issues such as environmental pollution, exposure to asbestos, or toxic mold.
Recalled Products: Claims arising from the use of recalled products can include issues such as failure to properly recall products, or continued sale of recalled products.
Inadequate Warnings: Claims arising from inadequate warnings or labeling can include issues such as failure to warn of potential hazards, or lack of proper instructions for use.
How to Be Properly Protected From Product Liability Insurance Claim Risks
When choosing product liability insurance, it is essential to consider the risks associated with the products you sell. You should also consider the following factors:
Coverage Limits: Make sure you choose coverage limits that are sufficient to cover the potential costs of a claim.
Deductibles: Consider the deductible amount you are comfortable with and how it will affect your premium.
Reputation and Financial Stability of the Insurance Provider: Choose an insurance provider with a good reputation and strong financial stability.
Claims Handling Process: Consider the claims handling process and how responsive the insurance provider is in the event of a claim.
Product liability insurance is essential for businesses that manufacture, distribute, or sell products. It helps protect your business from potential lawsuits arising from the use of your products. I can provide financial protection in the event of a claim. When choosing product liability insurance, consider the specific risks associated with your business and the products you sell, as well as coverage limits, deductibles, and the reputation and financial stability of the insurance provider. With the right product liability insurance coverage, you can safeguard your business and focus on your core activities with peace of mind.
Think you are immune to a Product liability insurance claims?
Everyone does! However, the product that was assumed to be the most harmless, that almost everyone used on their baby had one. Over Baby Powder. Johnson & Johnson suffered aProduct Liability Insurance Claimfor over $3.5 Billion, with an expected 40,000 more claims having been filed as of January of 2023.1 2Similarly, Fitness product manufacturer, Peloton, had claim expenses of $19 Million due to a product liability claim.3
Because every product is different, underwriting a Product Liability Insurance policy is complicated. If you need a quote on Product Liability Insurance Coverage, pleasecomplete a product liability Insurance quote request.
1https://fortune.com/2022/08/11/johnson-johnson-stop-selling-talc-based-baby-powder-cancer-lawsuits/
2https://www.npr.org/2022/09/19/1123567606/johnson-baby-powder-bankruptcy-lawsuits
3https://abcnews.go.com/Business/peloton-agrees-pay-19-million-fine-treadmill-recall/story
