The Importance of Product Liability Insurance
It is absolutely important for you to avail Product Liability Insurance if your company sells any goods, products or services to the general public. There is no certainty that the products you are selling will not cause injury, harm or damage to a consumer or their property. Even if you are absolutely sure of the durability or quality of your goods/products. A customer who is dissatisfied may be capable of waging a long-lasting and expensive legal fight against your company and you that may even deplete you of your money, time and resources. Even if you're going to win the case, It is necessary to remember that cases of product liability are among the most costly to litigate.
For any financially responsible business owner, Product Liability Insurance makes sense to include. You never know what can happen when you place your goods in your customers ' hands. Product Liability Insurance enables you to have peace of mind that you will gain a powerful security net to fall back upon if anything were to happen. That is why it is important to consider this insurance since the pledge or product liability insurance policy/ product liability policy is truly helpful for your business’s future.
Some more examples of small business that should leverage product liability insurance coverage are:
1. Sellers of Beauty or Fragrance
2. Enterprises that sell appliances
3. Children's shops, including distributors of toys, apparel , footwear, tools,
4. Sellers of footwear and accessories
5. Producers, wholesalers, or distributors of food
6. Suppliers of home enhancement
7. Productors
8. Animal shops
9. The Resellers
10. Bakeries, bars , coffee shops, or niche food stores
Product Liability Insurance Coverage
There are various types of claims that a dissatisfied and upset customer may hold against your business that product liability insurance covers. Here are a few common claims:
Defect in Design
A defect in design claims that, from the creation of its conception, a product was defective or harmful. This is different from a production or manufacturing failure in that the origin of harm was not born from poor craftsmanship or production, but the underlying nature of the product was harmful in and of itself.
An example could be, a consumer purchases a book for children that contains a few beads on some of the pages. Because the beads are small in size, the child of the customer chokes on it. While a manufacturing or development fault could be alleged, the consumer may also argue that the book which was supposed to be for children from its nature was inherently hazardous. I.e., no small material that a child might choke on should be used in a children's toy.
Manufacturing or Production Flaw
As its name suggests, this kind of claim implies a fault in the manufacture or manufacturing of products that has produced a hazardous or dangerous product. Flaws in manufacturing or production are any defects that happen during the making of a product that establish a possible cause of serious bodily harm or injury, property harm or economic loss.
An example could be a customer who bought a pair of shoes or sandals from your company has lately slipped and hurt him/herself because of the heel not securely fastened into the sole of the shoe/sandal. She spends for medical costs due to her injury and has sued your company for creating a shoe that was unsafe for the public.
Without Product Liability Insurance, to overcome this allegation, the company will be entirely responsible for facing all the legal and court fees. In addition, if the consumer were to win the lawsuit, the company may also be responsible for the legal expenses and medical costs of the consumer, depending on the result of the dispute.
Defect in Marketing: Inaccurate/Defective Notices or Instructions
A consumer may take action against your business for not providing the requisite warnings about your product 's hazardous aspects. The assertion being that a company has not properly and reasonably informed the customer of all the possible apparent risks and damage that the item may cause.
Your company, for instance, sells handmade natural cosmetics. One of your skin creams that includes several harsh components that should not be applied or put into sensitive areas of the skin is purchased by a customer. She applies her eyelids with the ointment and experiences serious chemical scarring. Since the client has not been alerted or properly advised by your company, a claim could be made against you for incorrect or inaccurate warning/notice or instructions.
Strict Liability
Finally, strict liability in relation to the goods is probably the greatest source of fear for a company owner since it is the most unpredictable and toughest to predict or manage. Strict liability enables consumers to hold a business liable if they can assert a number of fair claims, even if the actual intention of the company was not to hurt the customer or to cause any injury or damage. In such a situation, notwithstanding the negligence or intent of the manufacturer to hurt, the manufacturer must bear the blame for a faulty product.
A person must prove any of the following in order for a consumer to prove strict liability:
1. That the item had a defect that was harmful to the user
2. That the item really caused physical harm, collateral damage, or psychological distress (that is, not only did the product have the potential to cause injury, but it really did)
3. The consumer's incident happened when he was using it for the purposes intended. For instance, instead of on his body, a customer used paint thinner for the purposes of thinning paint.
4. After the consumer's transaction, no major improvements were done to the product. For instance, the consumer could not argue that the fault was created by the company if a consumer smashed a mug and then injured his hand on the shattered parts.
