Other Business Solutions
What is Product Liability Insurance?
As a business owner, you are responsible for every product you make or sell. If one of those products is faulty, or causes some sort of injury, you may get tangled up in lawsuits and your business may be held accountable for the consequences that could follow. These costs can rack up even if you may be proven innocent. Hence, a product liability policy can incrementally minimize the risk and costs you may face.
What does Product Liability Insurance cover?
Common issues businesses may encounter resulting in product liability claims include:
- Products that cause bodily injury to the customer
- Products that cause third party damage
- Products (most commonly Food and Beverage) that causes sickness
The common issues for these reasons include:
- Design defect: Unsafe or faulty design can lead to design defects
- Manufacturing defect: Issues such as mistakes during assembly processing or a missing piece
- Marketing defect: Incorrect labeling, lack of safety warnings or unclear instructions
In terms of costs, the following can be mitigated with a PL policy:
- Medical costs for injury
- Legal fees
- Defence costs
- Settlements made against your business
Policies are usually "claims made". Claims made policies cover claims brought against the insured during the policy period, even though the damage occurred was before the policy was in effect, but after the retroactive period which is stated in the policy. A less common policy is called "occurrences" policies. An occurrence policy covers claims arising from damage caused during the policy period no matter when the claim is filed. Claims filed many years after the policy has expired may be covered as long as the damage while the policy was in effect.
How important is Product Liability Insurance?
Who needs Product Liability Insurance?
How much does a Product Liability Insurance policy cost?
The following factors are taken into consideration when determining the cost of your product liability insurance policy:
- Claims history
- Policy limits
It should also be noted that Product Liability Insurance is commonly bought with Public Liability Insurance, as the added cost is minimum but the increase in mitigating risk is much more.