Buy Product Liability Insurance

Product liability insurance is a type of insurance coverage that provides protection to a manufacturer or seller of a product against claims made by customers or third parties who have been injured or suffered damage as a result of a defective or faulty product. This type of insurance covers the cost of defending a lawsuit, paying settlements or damages, and any associated legal fees. It is designed to protect a company from financial loss if it is found liable for producing, selling, or distributing a product that causes harm to a customer or other third party.

The average price of a standard $1,000,000/$2,000,000 Product Liability Insurance policy for small businesses ranges from $107 to $169 per month based on location, products sold, payroll, sales and experience.

When your business is sued, you may have to pay for the expenses that occur as a result of using your product. Whether it is medical expenses, loss of income or pain and suffering your business may have to pay.

Lawsuits against your business can cost you lots of money, and having the right product liability insurance coverage is the way to keep your business protected when it does.

Design Defect Claim - A design defect claim is when a person who bought your product claims that the product is unsafe because of a defect in its design. Once a person believes they were injured because of a defect in your product they can sue your company.

Manufacturing or Production Flaw - A person that buys your product and is injured could claim that during the process of producing the product a defect was created. Probably the person who bought the product is injured while using the product if so they could make this claim against your business.

Product Warnings And Instructions - If a person feels that they were injured by your product because you did not have enough warnings or instructions, then they could make this claim against your company. The claimant says that because of the lack of instruction they were injured while using your product and decided to sue your business.

Most of the lawsuits that happen may fall on the manufacturer of the product, but there may be times when the suit could fall on the product seller as well. Typically if the seller directly imported the product from outside the USA, or if you white or private label or alter the product in any way.

In a case like this, it is always a good idea as a vendor to have product liability insurance protection for your business. Product sellers include wholesalers, retailers, distributors, and resellers.

Once you are involved in the process of selling the product you need to have this protection for your business.

If a seller helps to market a product to a buyer and that buyer is injured, that seller could be held liable. If the seller has to pay for the damaged caused to a buyer then the seller could turn around to sue the manufacturer to make up for the losses from the lawsuit.

If a buyer can prove that the product manufactured contains a defect, injures the buyer or the injury occurred while the buyer was using the product then the buyer may win a product liability lawsuit. In a case like this, the seller or the manufacturer can be sued in the absence of negligence.

Following are some examples of product liability claims and how insurance helps to pay:

Example 1: Manufacturing Defect

A customer buys a new electric kettle from a retailer. Unfortunately, due to a manufacturing defect, the kettle overheats and causes a fire, resulting in significant property damage and personal injury to the customer. The customer then sues the manufacturer for the damages.

How Product Liability Insurance Helps:

Product Liability Insurance can help in such a situation by covering the legal costs associated with the lawsuit, including attorney fees, court costs, and any settlements or judgments that might be awarded to the plaintiff. The insurance can also cover medical costs if the claim includes bodily injury.

Example 2: Design Defect

A company designs and manufactures a high-end bike. However, due to a flaw in the design, the bike's brakes fail to work properly at high speeds, resulting in a rider's severe injury. The rider sues the company for his medical expenses, lost wages, and pain and suffering.

How Product Liability Insurance Helps:

In this case, Product Liability Insurance can cover the costs associated with the lawsuit, including the legal defense costs and potential settlement or judgment. This could include compensation for the rider's medical expenses, lost wages, and damages for pain and suffering. Without insurance, the company might have to pay these costs out of pocket, which could significantly impact its financial stability.

Example 3: Failure to Warn

A pharmaceutical company manufactures a drug that, while effective, can cause severe side effects if taken with certain other medications. The company fails to include this information on the drug's label. A patient who is prescribed the drug along with one of the contraindicated medications suffers a severe reaction and sues the company for damages.

How Product Liability Insurance Helps:

In such a case, Product Liability Insurance could cover the costs of legal defense, any medical expenses the plaintiff incurred due to the reaction, and any settlement or judgment awarded. The insurance could also cover public relations expenses if the lawsuit results in negative publicity for the company, damaging its reputation.