What is a Product Liability and How Can You Insure it?

Your business’s job is to provide a service, and these services might take the form of various products that you create. These might be consumable goods of any shape and size, and you of course want to take pride in the creations of your company.  

However, your products are liabilities because they can cause harm to the consumers in worst-case scenarios. These could put your business in the firing line and create significant financial challenges for the company in the future. It is imperative that you have product liability insurance as part of your general liability insurance plan. Here’s how this critical coverage works. 

What is products liability insurance? 

A liability is a responsibility that someone has for someone or something else. To insurers, a liability claim is one that they will pay when the policyholder makes a mistake or commits a negligent act (even an unintentional one) that harms someone else. So, if someone sues your company because they blame you for causing them harm, then liability insurance will help you repay them. 

Product liabilities are those that are specific to items that you manufacture or create, and then provide to others. You will of course have a quality-control process in place to test these items. However, you can’t eliminate the risks of accidents happening. Should problems occur, products liability insurance will help you respond to these claims. 

What is a scenario where I might need it? 

If you create a product of any kind, then you might need products liability insurance.  

Suppose, for example, that you own a furniture store where you build rocking chairs. One day, a rocker that you sold breaks while the owner is sitting in it. They sustain significant back injuries and sue your company for their medical bills and other losses. In this scenario, your product liability insurance can help you afford to fight the legal challenge and reach an appropriate settlement with the affected person, if necessary. 

What’s important to remember is that liability insurance generally pays the affected person., not the policyholder. However, the coverage can still help you cover your legal expenses as a result of an accident.  

How can I get this coverage? 

In many cases, you can buy products liability coverage as part of your general liability insurance plan. A general liability plan covers the most common liabilities present in most businesses, namely property damage and bodily injuries. Since most businesses have products, then this coverage is usually part of the standard liability package of most companies. 

To get the proper products liability insurance plan for your company, speak to one of our agents. We’re experts in all liability policies and can help you perfect your cove