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The Importance of Product Liability Insurance for Your Commercial Coverage

By April 8, 2021April 20th, 2023Business Insurance
Product Liability Insurance by Unisource Insurance Associates

To help protect your company from liabilities like personal injury and cyberattacks, you’ll need a commercial insurance policy. Product liability insurance is an important part of this coverage if you produce and sell products. Certain issues may arise from the use of your products, and the affected consumer or party may sue you for the resulting injury or damages. The right insurance policy can help protect you from loss when such a lawsuit is successful.

What Is Product Liability Insurance and Why Do You Need It?

As a manufacturer or seller, you have the right measures in place, including thorough testing and quality controls, to ensure that your products meet the highest safety standards possible. Despite your best efforts, there may be incidences where a defective product injures or otherwise harms the user. Product liability insurance can help protect your business against consumer or third-party claims or lawsuits arising from such a problem.

These claims may come from virtually anybody, including the product’s user or an affected bystander. Here, the role of insurance is to cover any legal fees and settlements, helping you protect your cash flow.

It’s important to have liability insurance if you sell any type of goods to other businesses or directly to consumers, such as:

  • Cars
  • Food
  • Equipment
  • Clothing
  • Medical drugs

Types of Product Liability Claims

  1. Manufacturing Fault

    In such a case, the victim argues that a product manufacturing defect caused their injury. The product flaw is an outcome of some error in producing it, for example, as a result of an issue at the factory where it was made. Different types of goods can have manufacturing or production flaws, such as medication with toxic contamination or previously unknown side effects. Another example is a moped with a faulty braking system that results in an injury-causing accident.

  2. Design Defects

    A safety defect in a single blueprint can have far-reaching effects on an entire product line created based on the design. In this scenario, the claimant argues that the injury-causing defect isn’t an isolated flawed production case. Instead, multiple products may have this inherent design problem, potentially affecting multiple users or at least putting many users at risk. An example of a design defect is a specific car model with defective airbags that fail to deploy on crash impact, exposing occupants or the driver to severe injury.

  3. Inadequate Safety Warnings or Instructions

    You’ll want to provide sufficient warnings about any possible harmful effects from using your product. It’s also critical to include clear user instructions for products whose wrong use may cause harm. You’re unlikely to be liable for end-user injuries or damages resulting from not following the instructions or warnings you provided. A cough syrup that doesn’t have on its label a warning about the hazards of taking the medication along with other drugs like aspirin is a typical case of failure to provide adequate warnings.

Product liability insurance can be a vital safety net for your company if you manufacture or sell products. If you’d like to learn more about getting the most from your commercial insurance policy, contact the agents at Unisource Insurance Associates today. We’ll help you secure any vital but missing insurance coverage to ascertain that your business is adequately better protected.