Business insurance can be a complicated subject, and product liability insurance is no exception. Sometimes it can be confusing to understand exactly what the policy covers, and why a business needs it in the first place.
Here are three situations that can come up, that might invoke a lawsuit & a business would find protection from using their product liability insurance policy:
A product your business manufactured, sold, refurbished, or distributed had a defect and that defect caused injury or damage to property.
This is definitely one of the most common causes of a claim about product liability. If a product’s defect caused damage to property or a body, liability for that damage can come back to you.
A product your business manufactured, sold, refurbished, or distributed had a flaw in the design of the product, and caused injury or damage to property because of that flaw. Even if you are not the manufacturer of a product that is poorly designed, you can be held responsible for the problems caused by the lack of testing or thought that went into the design.
Warnings about proper use were not included in a product your business distributed or manufactured or just sold or refurbished. If a person uses your product the wrong way, and warnings were not included cautioning against that use, you can be held liable for any damages that result. It’s absolutely critical to include warnings about how to properly use a product in the packaging.