Looking for Product Liability Insurance?

Product liability insurance is a kind of liability insurance that deals specifically with the damages that “products” cause. Unlike homeowners insurance or auto insurance, Product Liability Insurance is a kind of insurance specifically geared towards manufacturers, distributors, suppliers and retails who are actively involved in delivering physical products to customers. Without product liability insurance, an honest business can easily be bankrupted by a single lawsuit. The best way for businesses to protect themselves from product related liability lawsuits is to purchase product liability insurance from a reputable insurance company.

Why do I need Product Liability Insurance?

Product liability insurance protects both individual entrepreneurs as well as large corporations from lawsuits that arise from unintentional harm that their products create. Say a company creates a new kind of tooth paste that’s remarkably efficient at whitening teeth. Let’s say that this company releases this product and everyone who buys it is extremely satisfied. Let’s fast forward 10 years – and let’s pretend that people who used this new tooth paste regularly became more susceptible to gum cancer because of some unknown reason. The company that created this product had no intention to harm anyone, but is now potentially liable for millions of dollars in damages from disgruntled customers. The chances that something terrible like this happening is extremely low, especially since businesses are required to test their products extensively, but long-term complications can be difficult to predict. Product liability insurance would protect a business from these kinds of lawsuits as well as many other kinds of product related liability claims.

What Does Product Liability Insurance Cover?

Product liability insurance for the most part covers claims involving a product’s manufacturing defects, design defects, and marketing defects. Manufacturing defects would involve any “mistakes” made when a product was manufactured that could cause harm to customers while design defects involve actual mistakes made when a product was designed that could harm customers. A mistake in design simply means failure to properly design a safe product. Manufacturing defects typically involve low quality materials or poor workmanship during the physical manufacturing process. The best way to avoid this would be to choose a reliable company to manufacture your product, but even reliable companies can make mistakes, which is why it’s important to have product liability insurance. Marketing defects generally refer to cases where businesses failure to properly label their products. One example or a marketing defect would be if a toy company failed to put a warning label on their product stating something like “Warning: Small children should be supervised when playing with this product, as small pieces can be a choking hazard”.

Buy Product Liability Insurance

Businesses that directly sell products to customers can purchase numerous kinds of product liability insurance. Depending on what kinds of protection a business wants, a policy’s premium could vary greatly. A small business with only a handful of products may pay a much smaller premium than a large toy company with thousands of products. A large bio-pharmaceutical company that just released a new drug may have to pay tens of thousands a month in premiums, as if that drug proves to be dangerous, the insurance company would be on the hook for potentially billions in damages. Remember when Merck’s Viox drug was pulled off of the market? Merck had to pay billions of dollars to settle with customers – no insurance company wants to be on the hook for that kind of money. Restaurants on the other hand won’t have to pay very high premiums to get reasonable coverage, as simple cases involving food poisoning (which are rare) can usually be settled for under $10,000.  Businesses are encouraged to shop around to find the best product liability insurance policy.