What Does a Liability Insurance Policy for Defective Products Cover

Running a business these days requires that your business carry a myriad of loss prevention insurances, errors and omissions, personal injury and the like.

If you are in the business of manufacturing a product it is essential that you carry product liability insurance.

Almost every day you hear of product recalls. Products that pose hazards to the public are recalled for everything from posing a potential choking hazard to air pollution. You can be sued even if your instructions for use were unclear and the product was misused.

Simply put, Product Liability insurance protects your bottom line in the event of a consumer experiencing some type of bodily injury from the use of your product. With injury awards that cost companies millions yearly, all it takes is one person to bring a lawsuit against your company for you to lose your business entirely.

If you outsource the manufacture of your product, your business cannot survive without product liability insurance.

You may have done your due diligence and checked out everything required to manufacture your product to the highest standards but the possibility remains that when manufacturing of the product is done overseas, replacement parts may not meet your established standards.

Although this type of insurance is not cheap, premiums can range from $2,000 to $10,000 per year but if you take into consideration that you could stand to lose hundreds of thousands to millions of dollars in a lawsuit, the expense is negligible.

For many businesses today, general product liability insurance is a must-have when it comes to protecting a product manufacturer, seller or product business.

There are so many risks that these business owners face, and it’s important to have the most coverage possible.

Some of the elements included in a standard general liability policy are:

  • Premises and Operations: This element protects the business against lawsuits claiming negligence injury or property damage directly related to the premises or operations of the business holding the policy.
  • Products and Completed Operations: This part of a policy protects a business against lawsuits and claims arising from injury or damage related to the sale of a product with defects or defects in a completed action (such as the construction of a building).
  • Personal/Advertising Injury: This section of a general liability policy protects the business from certain types of lawsuits related to slander, libel, false imprisonment, or hurting another business via advertising.
  • Damage To Premises of Others: This section protects against damages to the premises a business occupies but doesn’t own.
  • Medical Expense Payments: This part of a general liability policy protects a business from lawsuits arising from injuries guests may suffer while on the property the business occupies.

As you can see, there are many different elements addressed by general liability insurance, and product liability insurance for manufacturers and sellers is one of those elements.

 

Should a Business Owner Purchase General Liability Insurance?

Entrepreneurs looking to start a business today have many risks they face in the area of liability. Not only do business owners have to pay careful attention to their startup costs, their sales and marketing, their payroll, the quality of the products and services they provide, and their customer service; they also have to be aware of the ever-present risk of being held

responsible or being sued for injury or property damage related to their products or premises.

Depending on the business model, a business owner will have to choose the type of liability policy should be purchased. A product liability insurance policy will cover certain types of lawsuits related to defective products and injuries or damage that their use caused; a Professional Indemnity Policy will cover omissions and errors that occur during the execution of a service agreement.

General liability covers a broad spectrum of liability, including product liability. With general liability, a business would be protected against claims of injury or damage arising from the premises or operations of the business; any associated medical expenses from such injuries; damage to a landlord’s property occupied by the business; lawsuits coming from claims of libel, slander, or other personal damage, and product liability, which includes claims and lawsuits alleging damage or injury while using a defective product.

Overall, general liability insurance is the best choice for most businesses, since it can usually be purchased for only a slight increase in price than other independent policies.

The Products Liability Insurance division of SADLER and Company, Inc. offers hassle-free quotes on product liability insurance coverage for companies and high-risk product manufacturers, importers, distributors and product resellers.

Our insurance offerings allow you to add Product Liability or Product Recall Insurance to your existing General Liability policy to help ensure complete legal liability coverage.

The policies protect you and your business from damages resulting from manufacturing design defects as well as misinformation in marketing or on product labels that could cause you to be held liable for property damages, injury or even death caused by the product manufactured, distributed or sold.

SADLER and Company, Inc. Services include Liability Insurance Coverage for Manufacturing Businesses, Business Owner Property Insurance Coverage, Product Manufacturers Business Liability Insurance, Workers Compensation Insurance.