What Is Product Liability Insurance Coverage?
What happens when a customer uses your product and gets hurt by it? What if it makes them fall sick? As a business owner, these are real scenarios that you need to be prepared for! One way to help protect your business is by having product liability insurance. Here is what product liability is and how getting coverage can help protect your business.
What is Product Liability Insurance Coverage?
When a product you sold injures or causes illness to your consumer, product liability insurance coverage helps cover those associated costs. Regardless of the size of your business, there are risks. Product Liability Insurance is typically included in your general liability insurance coverage.
What does it cover?
Product liability can help pay for things like lawyers for defense, medical bills, settlement costs, and even financial damages. Here are some common incidents that it can cover:
- Product injury lawsuits
- Illness caused by the product
- Injuries caused by the product
- Injuries to bystanders
- Food-related illness
- Wrongful death
- Property damage
What does Product Liability not cover?
Product liability does not cover everything. Ever policy is different, so talk to your insurance agent to find out the specifics of your policy. However, here are some common incidents that it does not cover:
- Slip and fall injuries
- Injuries to your employees
- Costs from product recalls
- Lost inventory
- Damage to your products
- Professional liabilities
If you need coverage for these incidents, then ask your agent about other coverage options! Learn more about our business insurance coverages here!
Can you be sued for product liability?
If you sell a defective product, even unknowingly, and it harms a consumer, they can file a lawsuit against you. If they can prove that you sold a product with a defect and it harmed them in some way, they could win a lawsuit! This is called “strict liability”. Product defects could be:
- Design flaws
- Manufacturing errors
- Advertising flaws
These things are out of your control, but you could still face a lawsuit if a customer is harmed by something you sold! Although you may feel like you have done nothing wrong, it’s a real situation you could be facing. Keep in mind that each state’s laws are different. Talk to your agent to see what your state laws are and how that could affect your business insurance.
How much coverage does my business need?
The amount of coverage depends on your unique situation. Different factors like where you are located or the industry you are in can affect the amount of coverage needed. As your business grows you may also find that you need more coverage. Communicating with your agent is the best way to help ensure that your business is ready for whatever comes its way!
Getting product liability coverage is an easy way to help protect your business from costly lawsuits. These things can happen without any warning. And if you do face a lawsuit, they can take a huge financial toll on your business.