If you are in the business of selling, distributing, manufacturing, or creating products, then you already know that accidents can and do happen. Product safety is always a huge concern for any business owner; however, some products are more inherently harmful than others, so business owners need to be prepared to adequately safeguard their business. Regardless of how safe you think a product is, imagine if it later became a topic of product liability lawsuit. Product liability insurance can protect your business against product related claims that could result in possible legal action and serious financial consequences.
What is Product Liability Insurance?
Product liability insurance is designed to protect your business from legal claims once your product is sold. If something is defective and causes injury or harm to someone, this type of coverage would offer protection against those claims. It also includes costs of settlements and/or judgements against you for a defective product (s), along with the costs of legal defense. A small business that fails to have product liability insurance protection could experience catastrophic financial consequences if one of your product’s consumers sues you. Because all insurance policies have provisions, limitations, and exclusions, it is recommended you contact your local N.Y. independent insurance agent to address any questions or concerns.
For example, a business that sold bed frames and rails was sued and a judgement rendered of $2.3 million after someone using the bed severely injured their leg by a sharp edge of the bed frame. This claim compensated the person for permanent disability, not to mention pain and suffering, and significant medical expenses.
Coverage Considerations for Product Liability Insurance
Some key things to consider when obtaining this specialized form of coverage for protection. It may offer coverage for a variety of scenarios in which a small business like yours could legally be liable for injuries suffered by a consumer. Below are some conditions that are typically covered:
- Marketing Defects- This is when a product is advertised in a manner that fails to warn customers of possible risks or misleads consumers in their advertising methods.
- Design Defects- This is when a product has a design flaw that makes it inherently dangerous.
- Improper Instructions/Warning- This is when a consumer has not been adequately informed of potential risks of using the product.
- Manufacturing Defects- This is when a product becomes dangerous from something going wrong in the manufacturing process.
- Strict Liability- This is when is business is liable for the product defect, without regards to negligence or wrongdoing.
Keep in mind that while product liability insurance may provide key protection against the above noted scenarios, it does not cover every possible risk.
Some possible scenarios that are not covered under a typical product liability policy includes manufacturer’s errors and omissions coverage, worker compensation insurance, and cyber liability insurance just to name a few.
Choosing the Right Protection for Your Small Business is Key
Whether you are in the business of distribution, manufacturing, retail, assembly, or online selling, you should consider having this type of insurance as a means of protection.
When choosing your product liability coverage, keep the following in mind:
- Identify Your Territory– Make sure your policy covers every area where your products are being sold.
- Recognize and Evaluate your Risk Exposure- Assess your business risk exposure and potential liability claims to determine the appropriate coverage limits to adequately protect your business.
- Know Your Independent Insurance Agent- Make sure you’re working with an insurance agent who understands your business and who can meet all your unique insurance needs for your specific business.
Depending on the type of products you sell/offer, the size of your small business, and your potential risk exposure, you may need to acquire up to several million dollars in product liability insurance. Cameron Group Insurance is here to assist you with any questions or concerns regarding your small N.Y. business and the protection it needs. Don’t wait! Call us today at 845-627-2130.
