What does product liability insurance not cover? Product liability insurance protects manufacturers and sellers for harm caused or damage by their products. This includes defects, design flaws, and failure to warn about potential dangers. While product liability is a powerful tool for protecting consumers, it does not cover everything. Although your product liability insurance policy might not include coverage for these hazards, it doesn’t necessarily mean that there will be a judgement in favor of a plaintiff against you.
What does product liability insurance not cover?
What does product liability insurance not cover?Intentional Misuse
Product liability may not cover harm caused by intentional misuse of a product. For example, if someone uses a hairdryer to dry their pet and the pet gets burned, the manufacturer cannot be held liable. Similarly, if someone uses a kitchen knife to open a package and cuts themselves, the manufacturer is not responsible.
Alterations or Modifications to Products
Product liability may not cover harm caused by alterations or modifications to a product. If someone modifies a car engine to make it faster and the engine explodes, the manufacturer is not liable. Similarly, if someone removes a safety guard from a power tool and gets injured, the manufacturer is not responsible. If you are selling altered or modified products please be sure to indicate that to your insurance broker so that your policy is properly rated.
Assumption of Risk
Product liability may not cover harm caused by the assumption of risk. If someone engages in a dangerous activity and gets injured, they may not hold the manufacturer of a related product liable. For example, if someone goes skiing and gets injured, they cannot hold the manufacturer of their ski bindings responsible.
Inadequate Instructions or Warnings
Product liability does may cover harm caused by inadequate instructions or warnings. If a product has clear instructions and warnings about potential dangers, the manufacturer may not be held liable if someone ignores them and gets hurt. However, if the instructions or warnings are unclear or incomplete, the manufacturer may be responsible for any resulting harm.
Subsequent Damages
Product liability does not cover subsequent damages caused by a defective product. For example, if a defective tire causes a car accident and the driver is injured, product liability would cover the driver’s injuries. However, if the driver loses their job because they are unable to work due to their injuries, product liability would may cover that loss of income.
Economic Losses
Product liability may not cover economic losses caused by a defective product. This means that if a defective product damages someone’s property, the manufacturer is not responsible for repairing or replacing the damaged property. However, if the defective product causes personal injury, product liability would cover the medical expenses, lost wages, and other related costs.
Misuse by a Third Party
Product liability does not cover harm caused by the misuse of a product by a third party. If someone lends a defective product to someone else and that person gets hurt, the manufacturer is not liable. Similarly, if a company uses a product in a way that was not intended by the manufacturer and someone gets hurt, the manufacturer is not responsible.
Products Sold Secondhand
If a product is sold secondhand or used, product liability may not cover any resulting injuries or damages. Manufacturers are only liable for products sold in the condition they left the factory. It is the responsibility of the seller to provide accurate information about the product’s condition. If you are selling second hand, refurbished, or rehabilitated products please be sure to indicate that to your insurance broker so that your policy is properly rated.
Intellectual Property Infringement
An unendorsed Product liability insurance policy does not include intellectual property insurance coverages. However, there are policies abvaiable that will entertain the coverage. If you are interested in coverage for intellectual property infringement, please be sure to request this coverage when applying for your product liability insurance policy.
Damage to the Product Itself
Product liability only covers 3rd party injuries or damages caused by a defective product, not damage to the product itself. If a product is damaged during use, the manufacturer is not liable for repair or replacement. If you need coverage for your inventory, your equipment, machinery, please be sure to request property insurance or cargo insurance from your broker.
Product Recalls
An unendorsed Product liability insurance policy does not include product recall insurance. However, there are endorsements available that add coverage for product recalls. If you are interested in coverage for product recalls, please be sure to request this coverage when applying for your product liability insurance policy.
What does product liability insurance not cover?
Product liability is an important legal concept that helps protect consumers from harm caused by defective products. However, it is important to understand what product liability does and does not cover. If you have been injured by a product, it is important to consult with a qualified attorney who can help you understand your legal rights and options.
Understanding the limitations of product liability is important for both consumers and businesses. Consumers need to know how to use products safely and be aware of when they may be responsible for their own injuries. Businesses need to be aware of their potential liability and take steps to prevent defects and provide adequate warnings and instructions.
Think you are immune to a Product Liability Insurance Claim?
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 a Product Liability Insurance Claim for 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, please complete a product liability Insurance quote request.
1 https://fortune.com/2022/08/11/johnson-johnson-stop-selling-talc-based-baby-powder-cancer-lawsuits/
2 https://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
