Do Product Wholesalers Really Need Product Liability Insurance?


In the world of insurance, product liability insurance has a significant role to play; however, without having an in-depth knowledge of this insurance type you can hardly avail its benefits.

It is a common misperception that the product liability insurance is beneficial to product manufacturers only. As a matter of fact,

product liability insurance is one of the types of insurance policy that is meant for the whole retail business.

Therefore, any organization that has been in contact with a product may avail the benefits of this insurance policy.

Let’s take an example of a Chinese organization that manufactures a certain product for Company A; the company A will give the product its brand name and pass it on to a wholesaler.

Now, the wholesaler would have to tackle the hassles of retailer distribution. If the wholesaler is getting 500 product pieces, he may pass on 300 of these pieces to the retailers. The retailers sell these products to the buyers.

Now, if the product malfunctions after a buyer purchase it, the whole supply chain or dealer links get affected.

This, therefore, clarifies, that the product liability insurance is for the entire supply chain or the dealers linked to the product. As a product wholesaler, this insurance will offer you protection from certain damage due to the supplied products.

This insurance policy type covers the legal aspect, as well as, financial aspect. However, the retailers and manufacturers also share some of the financial aspects or obligations, yet; it’s a lot beneficial that every linked personal in the business chain has its required protection.

Most business owners were not aware that product liability insurance policies are a simple matter of protecting their business when claims arise due to defective products.

Imagine this – you give your daughter a shiny new bicycle and are teaching her how to ride it. You have the training wheels on, and she is excited to try it by herself, without your help.

So you let go of the bike, and off she goes only to have one of the training wheels malfunction and you watch as she topples over unexpectedly.

Fortunately, your daughter probably will not be hurt significantly, but product malfunctions such as these happen often and sometimes can cause great damage to property or bodily injury.

When this type of damage or injury occurs, the user of the product, as well as anyone standing nearby who might have been injured, can sue the parties responsible for that damage or injury.

Typically, one would think that would be the manufacturer of the product; however, the entire chain of distribution of the product can be held responsible, from the manufacturer to the retailer.

The products liability insurance policy protects these businesses from financial ruin.

These insurance policies allow them to pay legal expenses arising from claims related to product defects.

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