Product Liability Insurance: Protection for Manufacturers & Sellers

Product liability insurance is an insurance product that provides monetary protection for accidental bodily injury or illness and/or accidental loss or damage that can occur as a result of a product for which the company is involved with manufacturing or selling. When referring to product liability, your insurance agent will explain that it refers to the responsibility of each and every person involved in the manufacturing and distribution process of any product in terms of damages or losses caused by the product. This starts with all of the manufacturers of component pieces and goes on down the chain to the parties responsible for assembly and also includes any wholesaler and retail store owners involved in the sale of the product.

Who Needs Product Liability Insurance?

Any party involved in the manufacturing or distribution processes of a product should have a product liability insurance policy. There may be legal claims which can arise from defects, either real or purported, in manufacturing, design, labeling, packaging, and even from faulty or incomplete warnings and warranty agreements. You may be surprised to know that claims can also come up during storage, handling, or transportation of your product which can result in a lawsuit. If you are involved in the manufacturing or distribution of any product, you must understand that you are exposed to these types of legal risks. You can protect yourself and your business by purchasing a product liability policy.

Important Information

The typical period for product liability insurance is one year and can be easily renewed upon expiration. If you have decided that product liability insurance is right for you, then you will need to provide specific information to your insurance agent including your company name and address, product descriptions and yearly sales projections, the countries in which your products will be sold or distributed, sales records for the past five years, a loss record and product recall record for the previous five years, and any relevant product certificates and test reports you hold. When comparing quotes from various insurance companies, it is important to find out about the company's background and track record for paying claims, about any exclusions that would be relevant within your policy, and if your products are sold internationally, whether or not the insurance company of your choice has a presence or legal rights to operate in those countries.

If you own a business which sells or manufactures any product, you need to be protected from lawsuits in the event an individual becomes injured due to using one of your products. The amount of coverage will vary for each organization, as the level of risk is dependent upon the type of business you own and the products you carry. For example, a small retailer of craft supplies will carry less risk than a business which sells fireworks. Just be sure to look over the fine print of any product liability insurance policy to ensure that the coverage will be sufficient for your specific needs.