Product liability insurance is a classic way for a business to protect their future compared to other insurances that are currently available on the market. This type of insurance looks at the drastic side of situations when businesses are confronted with lawsuits from an injury or defective product.
Strict liability insurance for products is best for a business that exports products since at any given time a product could malfunction or be defective. These simple problems can escalate if the buyer is injured, especially since buyers do not always read directions and instructions.
Product businesses and product manufacturers do not always take into account the knowledge of a buyer and the intuition they may have. With these warnings, just because a buyer does not read them, the business will not be at fault.
The best way to prevent any accident is to include any warnings and cautions about the product, which can ultimately prevent any lawsuit.
Without this type of product liability risk insurance, businesses can get in a lot of trouble when buyers sue the business, many can even suffer an unexpected debt and eventually lose their business. Product liability insurance provides complete coverage to the business, which compared to many other insurances, cover far more possibilities.
A Look at the Risks of Neglecting Product Liability Coverage
So, if you are a manufacturer, distributor, retailer or supplier of goods or services, you need products liability insurance coverage. There are many possible scenarios but the risks of going without it fall into three major categories.
Firstly, there may be a flaw in the product itself due to the manufacturing process.
Secondly, the product design may be unsafe.
The third risk is in labeling or instructions about use. If a consumer does not understand proper use of the product – injury or property damage may occur and you may be held liable. A million dollars worth of coverage is recommended as a minimum for most small businesses.
Your business liability may include medical costs, lawyers’ fees, and economic, compensatory, and punitive damages. When acquiring product liability insurance, it is important, to be honest about your volume of sales and the scope of your business.
There are penalties for underinsurance and they are substantial. It is important to understand the extent of your responsibility, long before you are confronted with a lengthy, expensive lawsuit. Liability insurance may be expensive but is far less so than legal costs.
Find an insurance broker who is familiar with your industry and take his or her advice. In any event, don’t neglect product liability insurance.