What Is Product Liability Insurance?

What’s product liability insurance and does my business need it?

In general terms, product liability insurance protects a retail business against claims made from the sale of goods, products, medicines or foods sold to the public.  It covers the retail sellers liability for losses or injuries suffered as a result of purchasing a product by a buyer, user or bystander.  It covers defective products or product malfunction.

In some cases, it may also protect the seller from failure to warn.  Sometimes, this coverage is found within a general liability policy for a business as products completed operations insurance. If your selling or wholesaling goods for public consumption make sure you review this coverage with your commercial insurance professional.

One recent example in the headlines that can show how product liability insurance works is tainted pet food manufactured in China.  The pet food was then imported into Canada and then distributed to two U.S. locations which supplied the tainted pet food to Wal-Mart which sold it to customers.

A number of pets died and barrage of law suits began.  The Chinese and Canadian were insulated from suits, and even if judgments were levied, claiming restitution was impossible from foreign businesses. Lawsuits like this can name numerous parties liable to claims of damage and responsibility.  The retail outlet, in this case, Wal-Mart, ended up facing the numerous suits filed by unhappy cat owners.

Here is an example of how product liability insurance can easily save a business of any size, even Wal-Mart from financial disaster.

Product liability insurance is a necessity for any size business which is distributing or selling products in the United States.  One lawsuit to a small mom and pop store can result in financial ruin for the business.  Examine your general liability policy and determine if more coverage is needed to protect your business from this type of risk.

Retailers: Consider Product Liability Insurance.

Product Liability Insurance protects a retail business against claims made from the sale of goods, products, medicines or foods sold to the public.  It covers the retail seller’s liability for losses or injuries suffered as a result of purchasing a product by a buyer, user or bystander.  It covers defective products or product malfunction.  In some cases, it may also protect the seller from failure to warn.  Sometimes, this coverage is found within a general liability policy for a business as products completed operations insurance.  Ask your commercial insurance agent about these scenarios and what risk exposure your business faces.

A recent example of how product liability insurance works is tainted pet food manufactured in China.  The pet food was then imported into Canada and then distributed to two U.S. locations which supplied the tainted pet food to Wal-Mart which sold it to customers.

A number of pets died, and Aa barrage of law suits began.  The Chinese and Canadians were insulated from suits, and even if judgments were levied, claiming restitution was impossible.

The retail outlet, in this case, Wal-Mart, ended up facing the numerous suits filed by unhappy cat owners.  Here is just one example of how product liability insurance can easily save a business from financial disaster.  Imagine if you’re your business was facing not just one, but multiple lawsuits.

Often, resellers and retailers fail to secure this coverage. The logic is that, since they did not manufacture anything, the coverage is not necessary. However, manufacturers are not the only ones subject to product liability exposure, retailers and wholesalers are often brought into a lawsuit for alleged negligence by the consumer. Many states follow the “stream of commerce” model of liability. This means that if your company participated in placing the product into the “stream of commerce,” it can be held liable for damages to the end user.

If your business provides any products to the public for use or consumption, then your company needs product liability or completed-operations coverage. In most cases, some form of this coverage will be present in the standard commercial general liability or business owners’ policy.

Check to confirm this with your commercial insurance agent. You will want to have a clear understanding of what is covered and what is not. (For example, some policies will cover economic damages, but not punitive or statutory damages) Product liability insurance is a necessity for any size business which is distributing or selling products in the United States.

One lawsuit to a small mom and pop store can result in devastation for the business.  Examine your general liability policy and determine if more coverage is needed to protect your retail store.

Product Liability and Your Business

Product liability insurance, what is it and do need it for my business?

Product liability insurance will protect a business from claims related to the manufacture or sale of a product, food, or medicine or other type of good to the general public. It covers both the manufacturer’s and sellers liability for losses or injuries to the user, a bystander, or buyer caused by a defective product, malfunctioning product, or defect in the design or even failure to warn.

Understanding how the potential liability of a product could affect the business as a result of a claim and the types of potential claims faced by a business. First off, there could be manufacturing or production flaws in the product. No matter how diligent or rigid a process, mistakes happen. This could even be a component in making the product which originally was presumed safe but then has complications and issues in the future.

Asbestos is one that quickly comes to mind. Second, there could be a defective design. Children’s car seats are an example of this type of defect. The third type of defect could be a labeling or usage directions flaw. The McDonald’s hot coffee lawsuit is a recent example of this type. All too often distributors and retailers fail to secure this coverage. The logic is that, since they did not “manufacture” anything, the coverage is not necessary.

However, manufacturers are not the only ones subject to product liability exposure, retailers and wholesalers are often brought into a lawsuit for alleged negligence by the consumer. Most states follow the “stream of commerce” model of liability. This means that if your company participated in placing the product into the “stream of commerce,” it can be held liable for damages to the end user.

One common outcome of any of these types of liability cases have resulted in extremely large awards and settlements. It is important to understand how a lawsuit of this magnitude could affect your business and you as the owner. In addition, all too often, the seller of these products fails to insure against liability, thinking the manufacture will shoulder the responsibility. If the product in question is imported from China or another foreign company, the seller in the USA becomes an easier party to target and potentially collect from then a foreign entity.

It’s important to study other cases and review who is named in these types of suits. An attorney representing an injured party will sue any entity involved from manufacture through end use.

Sit down with your licensed insurance professional and determine if product liability insurance is needed for your business. Ask tough and relevant questions to your commercial broker regarding the risk your business faces as it related to product liability. If your agent is recommending this coverage, take that recommendation seriously. Check with your state department of insurance as well for any recommendations and historical data.

Retailers and Product Liability

We frequently hear from retailers that they are confused about whether or not they need product liability insurance.

Although it is common knowledge that manufacturers need product liability coverage, it is not intuitive that retailers may be wise to avail themselves of these policies.

Let’s say a customer buys a product from your shop, say a disposable lighter, and the customer uses it and it it malfunctions, burning your customer. Your store may be sued — along with the manufacturer — even though you had nothing to do with manufacturing it or making it unsafe, and you had no way of knowing it would malfunction.

Product liability laws in America allow lawyers to hold everyone responsible for that has anything to do with making or selling products. Large money awards due to claims of injury can ruin a business without sufficient insurance for such cases.  The legal costs alone can ruin a business before a settlement or award is ever issued.

Product liability insurance protects retail businesses against claims made from the sale of goods, products, medicines or foods sold to the public.  Such a policy covers the retail sellers liability for losses or injuries suffered as a result of purchasing a product by a buyer, user, or bystander as well as defective products or product malfunction.  In some cases, it may also protect the retailer from failure to warn.

Initiate a discussion with your licensed insurance professional and review your needs and what is available in the area of product liability insurance.

Do I Need Product Liability for my Retail Shop?

We are often asked this question: Does my retail shop need Product Liability Insurance?

Those who own retail stores should indeed consider acquiring Product Liability Insurance.

Product Liability insurance is a life-saving necessity for any size business which distributes or sells products in the United States.

One of the important things that Product Liability insurance does is to protect retail businesses against claims which are made about the sale of goods, products, foods, or medicines which are sold at the retail level.

Sometimes, this coverage is built into a general liability policy for a business as products completed operations insurance.

Product liability insurance covers the retailer’s liability for injuries and other losses which are suffered as a result of a product sold. Those injuries may be suffered by a buyer, a user, or a bystander.

This type of insurance covers a product which malfunctions, or one which is defective, and in some cases, it also protects the retailer from failure to warn.

A real-life example of exactly how product liability insurance works is clear when we review the 2007 incident which involved tainted pet food which was manufactured and packaged in China. Once manufactured, the dog and cat foods were imported to Canada, after which the products were sold to customers.

Thousands of pets died, and thousands more were sickened, some suffering damage to kidneys which will last their lifetimes.

And then, the barrage of lawsuits began. The Chinese and Canadian companies were insulated from lawsuits, because even if judgments were levied, obtaining that restitution would have been impossible.

One example of how product liability insurance can easily save a business from financial disaster. One of the affected retail outlets — in this case, Wal-Mart — ended up facing the hundreds suits filed by unhappy cat owners.

Just one lawsuit like this against a mom-and-pop store could easily result in devastation for the business. It is imperative that you examine your general liability policy in order to determine if more coverage is needed to protect your retail store.

Do I Need Product Liability Insurance?

Does my business need product liability insurance?

Product liability insurance will protect a business from claims which may be related to the manufacture or sale or use of goods by the general public. These products include food, medicines, and many other types of products. Claims for product liability suits come not just from the manufacture, but also storage, handling, labeling, warranties, and even transportation.

Product liability lawsuits can bring massive claims and massive judgments against manufactures. In fact, the most recent trends according to industry experts has suggested the average pay out from a product liability suit now averages 2 million dollars, with many reaching much higher amounts. One judgment like this can force many companies today into financial ruin.

Product liability insurance will provide your business coverage against claims resulting from property or bodily injury that may be caused by your product. This coverage will pay for legal expenses in defending your business and any legal judgments against your company up to the policy limits. Even if you company is found negligent, this coverage should be in place subject to certain exclusions such as intent or deliberate wrongdoing.

The industry standard is a minimum of 1 million dollars in coverage. It is important to remember in a large lawsuit, numerous parties can be named. Even if you manufacture, but just transfer or retail products, the potential for a serious lawsuit is there.

Talk to your licensed insurance professional to determine if product liability insurance should be part of your business protection.

Ask yourself what the impact on your business a lawsuit would be financially, even if your business was found not liable. Legal costs alone can often be enough to cripple a small business. Don’t wait until it may be too late.

Retailers and Product Liability Insurance

Should a retailer purchase product liability insurance?

Often, manufacturers will need product liability insurance.  Retail stores also need to consider product liability insurance as well. Importers and distributors also need this kind of insurance. A retail store can be sued if a customer buys a product from them that causes injury or harm, even if they don’t make the product. In this case a lawsuit can be brought against the retail establishment and the manufacturer.

Product liability laws in the United States allow holding everyone responsible for that has anything to do with making and selling products. Large money awards because of injury claims can ruin any business if they do not have sufficient insurance for such cases.  Legal costs alone can ruin a business before a settlement or award is issued.

A fairly recent example of how product liability insurance works is tainted pet food manufactured in China.

The pet food was then imported into Canada and then distributed to two U.S. locations which supplied the tainted pet food to Wal-Mart which sold it to customers.  A number of pets died and barrage of law suits began.

The Chinese and Canadian were insulated from suits, and even if judgments were levied, claiming restitution was impossible.  The retail outlet, in this case, Wal-Mart, ended up facing the numerous suits filed by unhappy cat owners.  Here is an example of how product liability insurance can easily save a business from financial disaster.

Product Liability Insurance protects a retail business against claims made from the sale of goods, products, medicines or foods sold to the public.  It covers the retail sellers liability for losses or injuries suffered as a result of purchasing a product by a buyer, user or bystander.  It covers defective products or product malfunction.  In some cases, it may also protect the seller from failure to warn.  Sometimes, this coverage is found within a general liability policy for a business as products completed operations insurance.

Sit down with your licensed insurance professional and review what is available to your specific business in regards to product liability insurance.  Check with your state department of insurance for any claims or incidents on file similar to your type of retail operation, product, or industry.

Remember, it is far harder if not impossible to hold a manufacturer outside the United States responsible.  A product liability claim will often name the manufacturer, wholesaler, distributor, and seller in the suit.  Don’t risk your business on being uniformed about product liability.

Product Liability Insurance

What is product liability insurance?

In these days of increased consumer lawsuits, one type of liability coverage a business may want to consider is product liability insurance. Product liability insurance will protect a business from claims relating to both the sales and manufacture of a product. This includes foods, medicines and drugs, as well as other types good which may be used or consumed by the public.

Product liability insurance covers the liability for producing or selling the product from claims of loss or bodily injury to the buyer, user, or even a by stander which may have been caused by a defective product or a product malfunction. This coverage may also protect against a failure to warn.

It’s important for the business to understand the types of claims which may be made and how their business could be part of this type of claim. The first is a manufacturing or flaw in producing the product. This includes the chemical composition of the product including production of parts to manufacture the end product.

The second is a design defect in the product itself. This defect would make use of the product unsafe either immediately, or over time.

The recent Toyota brake case is one example of a design defect.

Suits against pharmaceutical companies are another example.

There also may be a defect in the actual instructions or labeling of the product. The MacDonald’s coffee suit is an example of this type of failure to warn.

In any product liability suit, the damages awarded include medical expenses, legal costs, compensatory damages, and more. These types of suits can and often do put a company of business. If your business manufactures, sells, or even transports good which may be consumed or used by the general public, take a hard look at this coverage.

Your licensed insurance professional can help you determine if your business is at risk and whether product liability insurance would make sense for you.

Why Would I Need Product Liability Insurance?

My agent has recommended my business needs product liability insurance, what is it and why should I need it for my business?

Product liability insurance will protect a business from claims related to the manufacture or sale of a product, food, or medicine or other type of good to the general public. It covers both the manufacturer’s and sellers liability for losses or injuries to the user, a bystander, or buyer caused by a defective product, malfunctioning product, or defect in the design or even failure to warn.

It is important to understand the how the potential liability could affect the business as a result of a claim and the types of potential claims faced by a business.

First off, there could be manufacturing or production flaws in the product. No matter how diligent or rigid a process, mistakes happen. This could even be a component in making the product which originally was presumed safe but then has complications and issues in the future. Asbestos is one that quickly comes to mind. Second, there could be a defective design. Children’s car seats are an example of this type of defect. The third type of defect could be a labeling or usage directions flaw. The McDonald’s hot coffee lawsuit is a recent example of this type.

All too often distributors and retailers fail to secure this coverage. The logic is that, since they did not “manufacture” anything, the coverage is not necessary. However, manufacturers are not the only ones subject to product liability exposure, retailers and wholesalers are often brought into a lawsuit for alleged negligence by the consumer. Most states follow the “stream of commerce” model of liability. This means that if your company participated in placing the product into the “stream of commerce,” it can be held liable for damages to the end user.

One common outcome of any of these types of liability cases have resulted in extremely large awards and settlements. It is important to understand how a lawsuit of this magnitude could affect your business and you as the owner. In addition, all too often, the seller of these products fails to insure against liability, thinking the manufacture will shoulder the responsibility.

If the product in question is imported from China or another foreign company, the seller in the USA becomes an easier party to target and potentially collect from then a foreign entity. It’s important to study other cases and review who is named in these types of suits. An attorney representing an injured party will sue any entity involved from manufacture through end use.

Sit down with your licensed insurance professional and determine if product liability insurance is needed for your business. Ask tough and revel event questions to your licensed professional regarding the risk your business faces as it related to product liability. If your agent is recommending this coverage, take that recommendation seriously. Check with your state department of insurance as well for any recommendations and historical data.

What is product liability insurance?

Product liability insurance covers claims made against the manufacture or sale of a product to the public. This insurance will cover the liability of a manufacturer or seller for injury or losses to a buyer, user, or bystander which is caused by a defect or malfunction of the product. It will often include coverage for a defect or failure of warning and usage. It is important that a business owner understands the potential liability and exposure the product has in going to market.

There are normally three different types of claims a business may face from its product:

The first of these is a design defect. Usually, a claim the design of the product is unsafe. Child safety seats are a recent example which may come to mind.

The second is manufacturing defects. Here, some part of the production resulted in creating an unsafe defect in the product. Dangerous chemical compounds in pressure treated wood are a recent case in point of a faulty production process.

The third type of claims is based on defective warnings or directions. In this case, the product is not properly labeled or a detailed and bold warning for the user to understand the risks involved. The McDonalds coffee case is a prime example of this type of claim.

Damages awarded in these types of claims are often huge and can include; medical costs,
compensatory damages, impact, and even punitive damages. Product liability claims have put many small businesses out of business.

It is important to remember this coverage is available to sellers as well as manufactures. Don’t make the mistake of assuming because another business produced the product, your business cannot be held liable in the event of an incident.

Spend some time with your licensed insurance professional to determine if this insurance makes sense for your business. Don’t leave it to chance and allow your business to be exposed to this type of large risk.