Protection for Claims
Product Liability Insurance protects against the following claims:
- Manufacturing or production flaws that cause unreasonably unsafe defects in the product. For instance, there may be traces of dangerous chemicals in your product, which could be toxic to those using it.
- Design defects that make the product unsafe for use by the public.
- Failure to provide adequate defect warnings or instructions for using the product. These claims arise when products are not correctly labeled or warnings are not explanatory enough to reduce consumer risks while using the product.
Depending on the case’s outcome, money may be awarded to the party that filed the claim for a compensatory loss (including medical costs, economic damages, and attorney’s fees) or punitive damages (designed to deter the defendant from repeating the action that caused the damage). These cases can sometimes put organizations out of business because the damages awarded are significant.
Why Purchase Product Liability Insurance?
Even if you do not physically manufacture a product, you may be at risk for litigation. The actual manufacturer is not the only party liable for product flaws, defects, and failures; retailers and wholesalers can also be found negligent. The logic is that a product goes through a stream of commerce from its inception to the hands of the consumer. If your organization had any part in that stream, and as long as the product was defective when it left your control, you can be held liable for any problems that arise.
The Basics of Product Liability Insurance Coverage
- Generally, there is limited product liability protection under a CGL policy, yet it may not be enough coverage to protect your business adequately. It is wise to discuss your policy in depth with InsureGood, LLC, to learn more.
- Premiums are based on the type of products sold, sales volume, and your organization’s role in the stream of commerce.
- Correctly identifying products in your policy will ensure adequate protection at a fair price.
Limiting Product Liability
Consider implementing these techniques into your organization to limit product liability:
- Develop a quality control program and distribute it to your employees. It should outline procedures for product safety, design, testing, and inspection. It should also include traceability, guidance regarding customer complaints, and a product recall program.
- Place serial or batch numbers on all products to ensure they are traceable in case of a recall.
- Keep records of all information about your products, including testing, product performance, component percentages, and complaints.
- Ask a legal professional to review warning labels, assembly and operating instructions, disclaimers, and other information distributed to consumers. If you need additional assistance, consult a product safety specialist.
- Ask a legal professional to periodically review contracts and hold-harmless agreements for use with your customers and subcontractors. Ensure that these contracts limit the liability you will assume for a quality product. Also, consider obtaining certificates for liability insurance from your subcontractors.
Protection for Claims
Product Liability Insurance protects against the following claims:
- Manufacturing or production flaws that cause unreasonably unsafe defects in the product. For instance, there may be traces of dangerous chemicals in your product, which could be toxic to those using it.
- Design defects that make the product unsafe for use by the public.
- Failure to provide adequate defect warnings or instructions for using the product. These claims arise when products are not correctly labeled or warnings are not explanatory enough to reduce consumer risks while using the product.
Depending on the case’s outcome, money may be awarded to the party that filed the claim for a compensatory loss (including medical costs, economic damages, and attorney’s fees) or punitive damages (designed to deter the defendant from repeating the action that caused the damage). These cases can sometimes put organizations out of business because the damages awarded are significant.
Why Purchase Product Liability Insurance?
Even if you do not physically manufacture a product, you may be at risk for litigation. The actual manufacturer is not the only party liable for product flaws, defects, and failures; retailers and wholesalers can also be found negligent. The logic is that a product goes through a stream of commerce from its inception to the hands of the consumer. If your organization had any part in that stream, and as long as the product was defective when it left your control, you can be held liable for any problems that arise.
The Basics of Product Liability Insurance Coverage
- Generally, there is limited product liability protection under a CGL policy, yet it may not be enough coverage to protect your business adequately. It is wise to discuss your policy in depth with InsureGood, LLC, to learn more.
- Premiums are based on the type of products sold, sales volume, and your organization’s role in the stream of commerce.
- Correctly identifying products in your policy will ensure adequate protection at a fair price.
Limiting Product Liability
Consider implementing these techniques into your organization to limit product liability:
- Develop a quality control program and distribute it to your employees. It should outline procedures for product safety, design, testing, and inspection. It should also include traceability, guidance regarding customer complaints, and a product recall program.
- Place serial or batch numbers on all products to ensure they are traceable in case of a recall.
- Keep records of all information about your products, including testing, product performance, component percentages, and complaints.
- Ask a legal professional to review warning labels, assembly and operating instructions, disclaimers, and other information distributed to consumers. If you need additional assistance, consult a product safety specialist.
- Ask a legal professional to periodically review contracts and hold-harmless agreements for use with your customers and subcontractors. Ensure that these contracts limit the liability you will assume for a quality product. Also, consider obtaining certificates for liability insurance from your subcontractors.
The Last Word
Transferring risk is an essential part of protecting your business. For more insurance and risk management guidance, contact an InsureGood Advisor today.
