The Many Facets to Product Liability Insurance

The Many Facets to Product Liability Insurance

Many self-employed people understand that business liability insurance is vital for their financial survival, but not so many of them realize that there are different types of liability insurance and which one is the best fit for their business. For some business owners, the best fit will be professional indemnity insurance; while other businesses will benefit the most from a general liability policy. Some businesses, however, will require a product liability policy in order to have adequate coverage.

First, one has to understand why there is liability surrounding products to the extent that insurance is needed. Product liability is the responsibility that a company who was involved in distributing a product must carry in the event that a consumer using that product has a claim. These claims can be against any company involved with the product - from the manufacturer to the retailer - and are usually regarding bodily injury, damage to property, or some other loss due to the use of a product.

For manufacturers, it's crucial to have great quality control & testing in the product creation phase.

Incorrect design specs, faulty components, hazardous materials, and a lack of testing can create product liability issues for a manufacturer. In addition, neglecting to place warning labels with potentially dangerous or damaging uses of the product can leave a manufacturer in a vulnerable place concerning liability.

Manufacturers are not the only pieces of the business pie who fall under statutory obligations. Distributors and sellers are also vulnerable to lawsuits from disgruntled consumers who have suffered damages while using a product. United States law states that a consumer is allowed to bring a claim against ANY company involved in the distribution of a product that causes damage, regardless of whether or not they manufactured the product.

Another thing to be aware of when it comes to product liability is that the person who brings a claim against an entity related to a product doesn't even have to be the person who bought the product...

or the person who used the product! Regardless of whether or not they are using the product, if a person is injured (or suffers property damage) because of a product malfunctioning or being used improperly, they can most certainly bring a legal claim against the company they feel should be held responsible.

It's apparent that liability insurance is critical for a business to have a safety net in the event that claims are brought against them. However, if a business has anything to do with products, the stakes are even higher. Liability insurance that's designed to handle product-related claims is absolutely necessary to prevent financial distress in the event of a legal claim.

Gemma-Leigh Garner is a freelance copywriter that writes on many different business topics such as product liability insurance http://www.products-liability-insurance.com & helping manufacturers & retailers understand how insurance works and what they should look for in a policy.

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