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Product liability insurance
Product liability insurance will protect the insured in the event that their products cause harm to the users or to property belonging to third parties. The product in this case can be anything that is tangible or can be consumed. Companies that are in the manufacturing sector especially those that manufacture food, toys and clothing items or any product that may cause harm to users are usually recommended to take product liability insurance cover.
So what exactly does this policy cover?
A product liability policy will protect the insured when the product they sold, produced or imported causes bodily injury, property damage or even death to the user. All legal expenses will be paid by this policy and if the case is unsuccessful, the policy pays the claimant the total amount being claimed.
What else is included in the cover?
When companies manufacture products, sometimes there are faults that are beyond their quality control systems. Such faults will be covered by this policy it is however important to note that product liability insurance does not cover bad workmanship. There are basically three main categories of product liability claims one can find. These are
· Design defects &ndash producing products that have defects
· Wrong or incorrect instructions – if a product was distributed into the market with wrong instructions and resulted in either misuse or caused harm to the user
· Production flaws &ndash if the product becomes unsafe due to some production flaw
It is also possible to be liable for product liability claims even if you are not the original manufacturer of the product. This usually happens when the manufacturer is no longer producing the particular product, when one can not identify the producer clearly and also when the product is modified or refurbished in one way or the other. As long as one is in the supply chain they will need this type of insurance.
In order to have the claim paid by the insurance company, there is need to prove beyond reasonable doubt that
· The products were defective when they supplied
· That the business also took proper measures to warn the customers about the misuse of the products
· The contract with the supplier in this case the manufacturer, must cover things like product returns, safety and quality control aspects.
· The sales contract with the consumer must also have a proper return policy for faulty items.
Additional cover
Having a product liability insurance policy alone is not enough. This cover is tailor made for product defects only and does not cover other important aspects like product recalls and tampering. It also does not cover product guarantees and income profit protection in the event that product sales are affected by product tampering. It is therefore advisable to take cover for these events what is important at the end of the day is to make sure that the business is adequately protected against all product related claims.
Purchasing product liability insurance
This type of cover can be very expensive because most claimants who win their cases are often awarded millions of dollars. When shopping around for coverage it is important to compare the different product liability policies on the market. It is easier to obtain quotes online first before making the final decision. It is better and much cheaper to deal with companies that specialize in this form of cover. Some businesses have chosen not to sell or buy certain products in order to avoid paying liability insurance on those products. If one is not sure about the requirements of acquiring this insurance they may need to see an insurance expert or broker.
In conclusion
Product manufacturers and designers as well as distributors and anyone in the supply chain must make sure that the products they are distributing to the consumers are safe and that they do not cause harm in any way. Consumers have got the right to sue in the courts of law any supplier or manufacturer who distributes defective products that are harmful to their health or property. The amount of cover that the business needs depends on the type of product they are distributing as well as the quantity of goods. Insurers look also look at the nature of your products and the annual turnover when they rate product liability policies.
