PRODUCT  LIABILITY  INSURANCE

What is Product Liability  Insurance?

Product Liability

Product liability insurance covers claims is linked to product defects. If your company manufactures or sells a product that has a defect and causes injury or property damage, your business could be held liable. If  you product cause damage, illness or hurt someone, it is likely they’ll seek compensation through the court.

Customers may also claim the product has in-built danger that customers should have been made clearly aware of with a label, For e.g.   “Keep product away from kids” or “beware product is hot”.

The main purpose of Product Liability insurance is to cover legal costs and damages for the business due to the claims. Any business that manufactures, supplies or sells products to the public should have product liability.

What is covered?

Businesses need to protect themselves from the greater risks. For even the most careful manufacturers, product liability claims happen. Typically, product liability claims arise from design defects, manufacturing defects, warning or use defects, and strict liability.

  • Design defects : claims related to the product issues that were present even before it was made.
  • Manufacturing defects : claims related to problems that occurred while the product was being created or assembled.
  • Warning or use defects : claims that the seller failed to provide details labels or warnings on risks and proper use.
  • Strict liability : a claim that is based on injury or damage resulted from proper use of product.

What should you know?

The product may be any type of good sold to consumers or businesses, from basic products like food and clothing to complex products like machines and medicines. The injured third party may be anyone who comes into contact with your product, including the buyer, users, or even a bystander.

Product liability will not cover injuries to your employees that may have happened while manufacturing the product. This coverage will also not cover the cost of having to recall your product.

The insurance type that can cover recalls is, logically, called Product Recall insurance.

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