Most business owners have probably never heard about the need for Product Liability Insurance Coverage. The real critical question is
What is Product Liability Insurance and Who Needs It?
Product liability policies protect businesses against legal claims from persons who allege that they have suffered sickness, injuries, or loss because of the product that the business supplies.
In a product liability insurance policy, a product means any tangible item that is sold or given away. According to the Consumer Protection Act of 1987, the business that supplies or manufactures the products is liable for the damages that the product may inflict on the customer.
If a product causes damage, the supplier, not just the manufacturer, can be met with a claim. An example might be if you are the owner of a café, and the food you order from a vendor and serve makes someone sick, you can be sued as well as the manufacturer of the food.
The cost of a policy is determined by risk and the amount of coverage. The possibility of risk is determined by the product you manufacture or sell, how people you use it, and the types of warning labels or disclaimers on the product itself.
Who can be held liable in a product liability case?
When a consumer is injured by a defective product, they may be able to file a product liability lawsuit. But who can be held liable in these cases?
The answer depends on the facts of the case, but there are three main types of defendants: manufacturers, distributors, and retailers.
Manufacturers can be held liable if their products are defective due to a design flaw, manufacturing error, or failure to warn consumers about potential dangers.
Distributors can be held liable if they sell products that they know or should know are defective. And retailers can be held liable if they sell products that are defective or fail to warn consumers about potential dangers. In any product liability case, it is important to consult with an experienced attorney to determine who may be held liable.
The important thing to remember is that product liability insurance does not give you a license to create inferior, low-quality products. As a supplier, look for a policy that protects you against low-quality manufactured products, indemnity costs, safety claims, and more.
By and large, it is customary for business owners to choose general liability insurance as it is the most widespread form of business insurance. Furthermore, most believe that general liability insurance will adequately protect their establishment against legal ramifications.
Although this belief has substance, it would behoove business owners to examine and compare variations of coverage provided by both general liability insurance and product malfunction liability insurance.
As a rule, general liability insurance encompasses extensive topics involving legal responsibility as well as some degree of product liability. However, it fails to include any type of professional indemnity coverage; that is lawsuits. In the same way, product liability insurance weighs in the probabilities and risks that will have an adverse effect on their business.
Thus, product liability insurance is fashioned to save the product-based businesses against legal proceedings and claims of injury or damage to property evolving from the use of alleged defective products.
Consequently, business owners should incorporate product liability insurance into their insurance portfolio. Most importantly, product liability insurance acts as a shield or proper dressing of protection for business owners who markets, delivers, or engages in the transaction sequence of merchandise.
In view of that, small business owners should reflect on potential financial drawbacks and harm to their establishments if they fail to secure product liability insurance coverage.
Getting coverage is easy – just contact SADLER for a quick online quote. The benefits of coverage surely outweigh the consequences. The risks are insurmountable but not without a viable resolution.