Whether your business is a small start-up or a major corporation, insurance isn’t a recommendation; it’s a necessity! You need it to protect your assets, employees, and business in case of an unexpected insurance claim. Without insurance, even a small loss could severely damage your business.
Most business owners know they need general coverage like property insurance, commercial auto insurance, or business interruption insurance. But many business owners don’t know the importance of product liability insurance (PLI), or even what it is. Let’s dive into how, why, and what of product liability insurance.
PRODUCT LIABILITY INSURANCE VS. GENERAL LIABILITY INSURANCE
If you’re a business owner, you probably already have general liability insurance, also known as business liability insurance. This protects you from large, general claims regarding personal injury or property damage.
General liability insurance is, well… general. It gives you only top-level comprehensive coverage protecting you from legal fees for slips, falls, or false advertising, etc. While it’s important to have this general coverage, your business will probably need more in-depth coverage if you sell or manufacture products. For example, many businesses will have professional liability or product liability insurance.
WHAT IS PRODUCT LIABILITY?
Your business is responsible for the products you create. That means if someone was injured or any property damaged as a result of your product, you could be at fault. Some examples of product liability include:
- Design Defects
Defects can include anything that makes it unsafe for the general consumer. This can include anything from loose parts to the potential for combustion.
- Manufacturing Flaws
Manufacturing flaws are anything that causes the product to be unsafe during the manufacturing process. Typically, these are one-off issues that aren’t caught by quality control.
- Defective Instructions
This occurs if your instructions don’t properly inform your user how to safely use your product.
- Lack of Warnings
You’re responsible for warning your consumer about potential flaws or problems. If you don’t provide adequate warning you could be at fault. Think of the McDonald’s coffee cup lawsuit that occurred because a consumer wasn’t warned that the contents were hot.
Even products that appear completely safe could malfunction unexpectedly. If this happens, your business could be found responsible for the damages caused. You need product liability insurance to protect yourself in case of a product failure or malfunction.
PRODUCT LIABILITY INSURANCE
Product liability insurance protects your business in case your product causes bodily injury or property damage. This coverage is absolutely mandatory for any business that manufactures or sells products to consumers. Having product liability insurance covers you in case of:
- Personal Injury
If your product causes an injury, your PLI can cover the cost of legal fees, lost wages, or injury care.
- Property Damage
If your product damages someone’s property, your PLI can cover the cost of legal fees, damage, and any repairs.
Even businesses that don’t manufacture a physical product still need a PLI. Businesses that benefit from this insurance coverage include:
- Retail Stores
- Pet Stores
- Coffee Shops
- And More
A product liability policy will protect you from financial losses and legal costs if your product causes any damage to a third party. These can include injury from a physical product or illness caused by food products.
Protect your business from unexpected product liability claims! At Cornerstone Insurance, we provide businesses with policies that protect everyone’s livelihood. To learn more about our product liability coverage or to get an insurance quote, contact our qualified insurance brokers.