Why you Need Product Liability Insurance

Huge financial losses and damage to your brand’s reputation can occur when a manufacturer or retailer produces or sells a faulty product—and when that happens, product liability insurance is the legal liability that can help your business be protected. If you are a supply chain and someone proves to be injured by something you sell or distribute, you and even your entire business are liable for that. Everyone from designers to suppliers can suffer the consequences. More output leads to a greater likelihood of products being defected.

Defects are imminent and always a risk; in fact, thousands of faulty products are reported every year in every industry. For example, Takata’s largest automobile manufacturer had to cease operations in 2018 after their airbags led to numerous deaths and injuries. 

Likewise, according to the Consumer Product Safety Commission, over 5 million infant sleepers were tied to 30 deaths in 2019, and the USDA’s Food Safety and Inspection Service reported that over 11,760,525 pounds of chicken strips were contaminated.

It is important to remember that as a product manufacturer, wholesaler, designer, supplier, or retailer, your business, people, and profits are subject to a multitude of risks every day, and in order to protect your business against the costly expenses of defending potential claims, you must ensure that you are adequately protected with insurance policies tailored to your business’s specific needs and challenges.  

Product liability insurance

The more you sell, the greater your risk of encountering repercussions. Product liability insurance protects manufacturers, wholesalers, distributors, and businesses alike from product claims. It can also cover bodily injury and damage to property caused by your product, and/or the damage caused by the sale, handling, or distribution of said products. Anyone in the chain of manufacturing and supply can be held liable. The lawsuits and claims are usually based on manufacturing and product flaws, design defects, and important details being left out of the warning signs and/or instructions for your product. 

Make sure you are adequately protected

Contrary to popular belief, product liability insurance premiums are not as costly for small businesses as one might be led to believe. With premiums starting at a few thousand dollars and covering potential claims, it would be irresponsible not to consider this coverage. 

A standard commercial insurance policy can have more exclusions and even more reasons for an insurance company to deny coverage of future claims—exclusions could be made due to changes in your production method, materials, and/or design. Even adding new products to your distribution line can affect your coverage.

In short, your business might already be covered partially or wholly under a partner or affiliate policy but it’s always best to understand how adequately you are protected before any lawsuit occurs. 

Visit our website to learn more about the different types of policies necessary to protect your retail and manufacturing business:

• Find out which policies you need to protect your retail business.
• We design a policy program that protects your manufacturing business from everyday risks.

At the end of the day, product liability insurance can protect your business against losing millions in lawsuits and saving it from going under. Contact one of our insurance specialists to determine whether your product liability insurance is covering all of your bases in the case the unexpected happens. Contact us.