Product Liability
There’s a misconception, especially among small businesses that they don’t need product liability insurance. Or they feel it’s too expensive. But the minute you start selling a product, you are at a risk of coming across a product liability claim.
In the eyes of the law, any business supplying consumable or usable products to the customer/the third parties, is liable to any bodily harm or property damages caused by it.
Even sickness caused by a consumable food or beverage, and the issue is traced back to the company, the business owners can be found responsible to the damages. The four main and common liability claims are design defect, manufacturing defect, marketing defect, consuming defect.
- Design defect: An issue where the product design is unsafe or faulty.
- Manufacturing defect: This issue is the faulty product assembly or product missing important parts.
- Marketing defect: It’s an issue where the product is in good shape but there’s incorrect marketing and labelling of the product. Even insufficient product instructions or insufficient safety measures can have companies facing huge product liability claims.
- Consuming defect: In cases of lack of information on present allergens in the product, or injury or sickness caused due to the consumable product. Business owners will be liable to the defect claims.
Product liability lawsuits can be very expensive. In extreme cases, it can force a smaller company to shut down completely. Having a specialized product liability insurance will cover your massive legal fees if your company is found guilty of the damages and losses occurred to the third parties.
