The Importance of Products Liability Insurance for Product Businesses


Products liability insurance protects businesses from the consumer claims of possible negative effects of their product or service.

The main examples of these claims include manufacturing or production flaws, design defects, and defective warnings or instructions.

With product liability coverage, manufacturing plants will not be held responsible for harmful chemicals that are created in part due to the production process. Also, with the insurance, companies will not have to face consequences associated with an unsafe design plan. Basically, this insurance states that the business is supplying a product but the consumer must use it at their own risk.

This insurance is important because, without it, companies could be held liable for situations that would cost the company millions of dollars, essentially ruining the company. Often, re-sellers, gray market commercial sellers, and retailers fail to secure this coverage. They think that because they don’t make the product, they are not liable, but that thinking is wrong.

Many wholesalers are often brought into a lawsuit for alleged negligence by the consumer. Most states follow the idea that if you helped supply the product to the public then you are responsible for that products outcome. If your company provides any products to the consuming public, then your company needs product liability coverage.

Go here to get more information on product liability or to apply for coverage from an agency that specializes in protecting companies just like yours.

What Falls Under Your Product Liability Insurance Coverage Policy?

It is not advisable for you to get product liability insurance coverage for your products and then proceed to fold your arms and leave it at that; as if you haven’t a care in the world. Insurance policies exist to protect you against financial losses associated with defects beyond your control, but they do NOT absolve you of the duty of care you owe your consumers to do all you can to ensure they can safely use your product.

Insurance policies only cover damages resulting from defects that were bound to escape detection by quality control.

Coverable costs do not only include punitive damages awarded to plaintiffs; they also go further to include all legal expenses used in the business’s defense. Financial costs that arise where the quality of product concerned is found to be below industry, or generally accepted standards, do not fall under product liability insurance coverage.

Before issuing your business product liability insurance coverage it is customary practice for an insurance company to run checks on your production processes, human resources, and equipment to ensure they are up to standard. So you might not be able to even get any insurance at all if your products are your business is not acting in accordance with good standard practice.

Learn more about product liability insurance, from SADLER If the insurance company can prove that the defect in question was caused in any way by avoidable negligence on your part, you will find yourself on your own; the insurance company reserves the right not to cover your losses if such is the case.

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