Whether it’s a small business producing handmade children’s toys or an international manufacturing conglomerate, any business, regardless of size or product manufactured, is at serious risk if it does not have product liability insurance.
If your business is involved in any way in the process of manufacturing a product – whether you are a supplier, the actual manufacturer, or a retailer, it is important that you obtain this insurance.
You may say to yourself – I’m a responsible businessman, I produce a safe product,
why would I waste money on this type of insurance?
The answer is simple: while you may be responsible, your consumer may not.
There are several ways in which a business can be subject to legal action or civil suits with regards to its products.
- The product may be defective and cause harm to the customer. Even if the business had no knowledge of the defect it may still be held responsible.
- A consumer may use the product in a way other than it is intended. Even though the consumer used the product in a way other than what the business intended they can still be held responsible if they did not expressly advise the customer through a label or warning in the instruction manual that the product is not to be used in that manner.
- Even if the consumer has no actual standing to make a claim against your business – frivolous lawsuits are filed, and even if the business is not ultimately held responsible the legal fees incurred during the process can be crippling.
Depending on the size of your business and the amount you sell each year’s premiums cost to obtain products insurance coverage for liability security may vary. But insurance of any kind is a tradeoff – you may pay a high premium, but you may be saving yourself much more money (and even your business) in the long run by obtaining product liability insurance.
While some people know that product liability is about a business being held liable for injuries or property damage arising from the use of a product that is defective or not clearly labeled, many do not realize that it is not simply about the person who purchased the product having the right to sue the companies involved in the distribution of the product.
For this reason, it’s imperative that a business gets a policy that protects them from products liability insurance. Actually, any person who is harmed (or who suffers property damage) due to a defect in a product can get full disclosure about the companies involved in the distribution of the product.
That means that even passers-by who are simply at the wrong place at the wrong time can get the information they need to sue every single business involved in the distribution process of a product that caused the injury or damage.