Businesses that manufacture products often overlook the many problems that can arise when their products fail and as a consequence cause some form of injury or property damage due to product liability claims. Such failures can lead to claims of compensation and sometimes lawsuits; both of which can be very expensive.
Product liability insurance is an effective way of dealing with such problems.
Claims for product liability can arise in several ways. When a product fails, and the failure causes someone to be injured, then the injured party may bring a claim for product liability against the manufacturer. Apart from bodily injuries, product failures can also cause property damage.
Such damage will also lead to a product liability claim. Not all product liability insurance result from product failures. Product may sometimes work as intended to but may be misused as a consequence of a lack of clear instructions or warnings labels.
Having a product liability insurance policy should be considered a critical part of any company’s coverage. First, this type of insurance can protect your company from liability in the case of product failure or one that causes injury to a consumer.
This can result in action in court against your business, which this insurance covers you from.
If a defect arises in a product during its manufacturing and causes issues after purchase, your business can also be liable. The liability insurance covers you in this case as well.
Your company may have been only a part of the process in making a part for a larger product, but if that part is found to be defective and the cause of the issue you are no less responsible. A final reason to have product liability insurance deals with how the consumer uses that product you sold him.
For example, due to a manufacturing defect, if a customer purchased a hedge trimmer and used it in the wrong way causing injury, he could sue your company if the product wasn’t produced with the necessary instructions or warnings on the packaging and/or product.
These three reasons are serious in nature and can occur to anyone with a business that sells any type of product to the general public. Putting product liability insurance on your coverage plan is a wise move and will protect you from an unfortunate event.