There is no question about it: If you make or distribute a product, you must have product business liability insurance. You may feel that it is unlikely that your product might every hurt someone or their property, and that there is no chance of a defect in your product.
However, product liability insurance protects you from an element you can’t control: how people use your product.
You can, in fact, be sued if someone is injured using your product in a way it was not intended if you did not warn against that specific usage in your packaging.
Take for example the cat in the microwave urban legend. This is a story in which a woman put her cat in the microwave in order to dry it off. The cat, of course, did not survive this. The story takes a wackier twist when she then sues the microwave company for not warning her that you should not use a microwave in this capacity; and she won! While this is a ridiculous tale, it is thought by many to be true, simply because that is exactly how product liability works. You simply cannot rely on the common sense of the general public.
So, Product liability insurance is an important insurance coverage component that should be considered by any small business planning to sell or manufacture products. Regardless of the type of products that are to be sold or manufactured, there is always the possibility of consumers being injured by the product or claiming that the product did not perform as advertised.
General liability insurance, which is a common form of business insurance that most businesses obtain, will generally cover some aspects of claims of property or personal injury from product use; however, this form of insurance does not offer the same level of coverage offered by specific product liability insurance policies.
Small business owners selling seemingly innocuous products often believe that they do not need to incur the additional expense of product liability insurance; however, if one defective product gets past their quality assurance efforts, or someone experiences property damage or personal injury from a product without a proper warning label, this one, individual lawsuit could be enough to shut a small business down.
Because of this, it is imperative that all small business owners consult with an insurance specialist to determine which forms of insurance coverage will safeguard their business and their livelihood, and should give special consideration to product liability insurance, which can protect them from the devastation of a lawsuit claiming property damage or personal injury from a product that they sell or manufacture.