The Need for Product Liability Insurance Coverage to Manufacturers

When you are an exclusive owner of an organization, there are a few advantages as well as a few disadvantages. An advantage is that you can manufacture the commodity of your choice while one major disadvantage is that if your product has caused any harm to the buyer, it can proceed as a legal case.

Whether the fault lies at your end or the client did not use the product appropriately, it will be you who will be accused.

With this in mind, you should always jump towards having your products insured in order that you do not face any material loss. The issue of having an appropriate product liability insurance policy should not be overlooked as it can at times save you and your business from a big loss.

Product liability insurance coverage helps to protect businesses from product’s claims relating to the goods; they make or sell.

Types of Claims

Now, these claims can be based on

  1. Design defects (where the issue of concern is that the design of the product in question is inherently safe)
  2. Defective instructions/warnings (where it is believed that the product was insufficiently labeled)
  3. Manufacturing flaws (in which case the plaintiff seeks to prove that some part of the production process created an unsafe defect in the final product).

The damages that are traditionally awarded in successful lawsuits include

  • medical costs,
  • economic damages,
  • and compensatory damages.
  • Some judges can even go further and demand that the defendant (the business) cover the attorneys’ costs and fees of the plaintiff and cough up punitive damages as well.So you see, product’s claims can indeed be very costly.

Retailers and other resellers are sometimes under the erroneous impression that they do not need product liability insurance coverage.

Many times a general liability insurance policy is not enough. Some people in the industry feel that they cannot be held liable simply because they are not manufacturers.

This is usually a costly mistake on their part because, in most places and circumstances, a company can be held liable for damages to a product’s end user if it participated in placing that product on the train of the commodities exchange. This makes distributors and retailers just as liable as manufacturers.

So, anyone who is in the business of manufacturing, distributing, or selling goods or products needs to have product liability insurance coverage to secure them or their organization.

Author: Gemma-Leigh Garner

Gemma-Leigh Garner lives in Austin,TX and is a direct response copywriter that writes as on many different business financial topics.