A Look at the History of Product Liability Insurance in America

Prior to the year 1900, American businesses did not need to worry about having product liability insurance in place in case a consumer sued over a faulty or unsafe product. The theory of product liability and the need to have a business covered by an insurance plan that catered to product liability insurance comes from the industrial revolution.

Before machinery started producing quantities of consumer goods for sale, starting in the early 1900’s, consumers were expected to use their own judgment on if a product was well made or not. Quality craftsmen existed during this period of time, and they took pride in making individual products for sale.

As automobiles became popular after World War One, and factory production started including a labor force interested in running machines, the notion of product liability insurance started to become a thought that would still take years to develop. During the 1920’s and 1930’s early factory machinery did produce flawed items now and then.

Between the early 1900’s and the beginning of the 1940’s, consumers were buying products based upon a long-time theory of intelligence. It was assumed that consumers could tell when a product might be hazardous to buy, own, or operate and that it was up to each individual consumer to use common sense while shopping.

World War Two changed how factory productions worked and added the female population into the workforce. Factory machinery was streamlined, and more consumer goods entered into the marketplace. With the widespread use of electricity in new items becoming the norm – there were lots of product liability insurance types of claims entering into the court systems as consumers came in contact with faulty electrical products.

By the 1960’s our current expanded situation in product liability insurance issues was set in stone due to negligence, breach of warranty and strict liability. Court laws had changed to allow consumer’s access to the manufacturers and distributors of items being sold that were unsafe. While consumers still shopped with the attitude that it was up to them to judge a product’s safety, the laws were letting some product liability lawsuit plaintiffs receive large amounts of money for claims.

Today, product liability insurance is needed by all businesses that make or offer products to consumers. The consumer is no longer required to use any judgment at all while using a product for the purpose that it was intended for. If the product’s instructions do not make it clear that an electrical appliance should not be used in a bathtub this is a potential product liability insurance claim problem.

Product liability insurance covers manufacturers, retail suppliers, and store owners if a product somehow fails to meet the public’s standards. Each product sold, including those from an antique store, must have all hazards announced to the consumer or there is a possibility that your store will be making a product liability insurance claim.

It is very advisable today, with the product liability situation the way that it is, that all stores, retail supply sources, and manufacturers have some product liability insurance on hand and available in case a problem comes up. The courts are known to give consumers suffering damages very large settlements at times.