Product liability coverage provides protection against bodily injury and property damage losses arising out of some defect in the product you sold, manufactured or distributed. Product liability insurance may also provide coverage for claims arising from damages due to providing inadequate instruction for use of the product or a failure to warn on your product label.
Don't let a claim that you weren’t prepared for wreak financial havoc in your business and your life. A products liability insurance policy is designed to protect you against claims that are common in the products manufacturing and distribution industry.
What Companies Need Product Liability Insurance?
- Nutraceutical, Vitamin & Supplements
- Beauty & Cosmetics Products Mfg.
- E-Cigarette and Vape Products
- Sporting Goods Mfg.
- Consumer Products
- Industrial Products
- Product Recall
- Discontinued Products
- Medical Devices
- Food Products Mfg.
- Clothing Mfg.
When you produce a certain kind of product, you face three specific types of liability issues
- Manufacturing or production flaws: If a part of your production process has created an unsafe product, you can be held responsible.
- Design defects: If the actual design of your product can cause harm to consumers, you will be held responsible for any damages.
- Defective warnings or instructions: If your product doesn’t have the right warning labels or clear instructions and a consumer is injured, you might be held responsible.
What Does Product Liability Insurance Cover?
- The claimant suffered an injury or other form of loss. If the individual making the claim can’t prove that the product actually caused any harm, there is likely not a strong case and you won't face charges.
- The product was defective. If the claimant can’t prove that the product has a defect which caused the loss, it may lead to further questioning of the injury situation.
- The product’s defect was solely responsible for the injury. If your product is correctly labeled with safety instructions and the user fails to adhere to them, you likely can’t be sued for a defective product.
- The product was being used as intended. If the claimant isn’t using the product as it was intended, the likelihood that the claim will go forward is low.
Product Liability Court Cases
The damages awarded in these claims include medical costs, compensatory damages, economic damages, and, in
some instances, attorneys' fees, costs and punitive damages. Product liability claims can and do put businesses out of
business - just ask any of the officers from any asbestos manufacture
- Blitz gas cans: Consumer accused Blitz of making defective gas cans because they would explode when used to pour gasoline on a fire. Each claim cost nearly $4 million and in 2012 alone, more than 30 cases were filed. The company claimed bankruptcy and shut down.
- Ledraplastic balancing balls: When one of these balancing balls burst under the weight of Francisco Garcia of the Sacramento Kings and his weights during a workout, he sued Ledraplastic. Garcia was unable to work for four months. He and the team received almost $30 million in damages.
- McDonald’s coffee: Stella Liebeck accidentally spilled burning hot coffee on her lower body in 1994 and sued McDonald’s because their coffee was served at nearly 40 to 50 degrees higher than any other fast food coffee provider. She was awarded $2.7 in damages and $160,000 for medical expenses.
Product liability insurance covers the manufacturer's or seller's liability for bodily injury or property damage sustained by a third party due to a defect or malfunction of the product. The injured third party may be a buyer or user of the product, or even a bystander.