Product liability and public liability are insurances that can be bought together as a bundle under commercial general liability insurance. They are both top insurances needed to protect the business’s liability when things don’t go the way planned.
Having the right liability insurance is crucial for a business as it can save a company from substantial financial loss and reputation damage. In addition, both public and product liability cover third party injuries and property damage due to business mistakes/ activity.
This article will explain the purpose of public liability and product insurance and the difference.
What is Public Liability?
Every business has public liability risks: either on your premises or where you meet your clients. The business is responsible for any third-party injuries or property damage on the premises or due to business activities.
Thus, businesses that invite customers and clients to their business sites have a higher chance of a public liability claim. These businesses include restaurants, shops and even gyms. A public liability claim can be expensive and ruins the business’s reputation.
Therefore, businesses should purchase public liability insurance before it’s too late.
Public Liability insurance protects the insured if a third party sues the business, alleging that business activities or negligence caused them some type of bodily injury, death or property damage.
Public Liability Insurance Cover Includes:
The insurance will cover the cost of:
- Bodily Injury: Public liability insurance will cover medical and compensation costs when someone is injured.
- Property Damage: The insurance will cover damage to a third party’s property-replacing or repair costs.
- Legal Expenses: Additional cover is the cost of hiring and paying a lawyer to defend your business in a lawsuit. At times the company is not at any fault, and it may be a false claim which needs to be fought.
Public Liability Examples
For example, A customer enters your shop and slips and falls‘ due to wet floors. The customer will have the right to sue the business for injuries due to their negligence. Depending on how severe the injury is, the company will be liable to pay for the injury and compensation.
Another example is if, during the meeting (any location), your employee spills his coffee all over the client’s laptop. The client can sue the business for property damage and loss of essential files. The company will be liable to pay for repair or replacement of the property and compensation- if experts can’t recover work.
What is Product Liability?
The product industry is one of the largest industries, including millions of products from food, medicine, clothes, technology, and more. Each business involved in the industry can be a victim of the many product liability risks.
Additionally, all product businesses are responsible for the product’s outcome toward their customers. Results should be good but sometimes can be bad or even dangerous. A product can harm a customer in many ways, no matter what the product is. Third-party injury or property damage due to a product defect can result in an expensive lawsuit against the business.
Hence businesses buy product liability insurance. Product liability insurance provides cover against bodily injury or property damage claims against a product a company- sells, makes or distributes.
Product Liability Insurance Cover Includes:
The insurance will cover most costs related to claims that result from:
- Design Defects: claims related to the product issues due to the poor design.
- Manufacturing Defects: claims related to problems while creating or assembling the product. This can include toxic chemicals used or wrong materials.
- Failure to Warn Claims: claims that the seller failed to provide detailed labels or warnings on risks and proper use
Product Liability Examples
A famous example of a product claim (manufacturing defect) is the Samsung phone battery that exploded, causing injuries and property damage worldwide—resulting in Samsung paying millions to resolve cases.
Another example is a poorly designed coffee machine that sprays hot liquid on users causing burn injuries. An injured third party can sue the coffee machine business for the design defect. The company will have to pay for medical costs and compensation.
Does A Business Need Both Insurances?
Businesses do not intend to harm their customers and clients; unfortunately, accidents happen. If your company provides products and deals with customers/clients directly, you will need public and product liability insurance. Combining both insurances will protect your business from almost all third-party risks.
Additionally, having both insurances will help a business save a large amount financially and help defend its reputation. No business should suffer from mistakes out of their control, and these insurances understand that. Therefore, the insurance reimbursement satisfies the company and the third party affected by providing the best cover during challenging situations.