Running a business comes with its fair share of logistics and liabilities. Aside from the intricacies of procuring inventory, you have to think about the processes involved in moving goods to your customers. When managing a product-based business, customers expect you to deliver safe and reliable products, but mishaps may happen from time to time.
If a product you made or sold causes bodily harm or property damage, product liability insurance covers you against potential financial implications. At its core, product liability insurance is a type of business insurance that covers compensation claims in case of injury or property damage by a product your company has sold.
Why Consider Product Liability Insurance?
Even with the utmost safety protocols when handling your goods, there is always the possibility that something could go wrong. Product liability insurance gives you peace of mind in the event of any claims. Here are three reasons you should consider product liability cover for your business.
- Protection Against Manufacturing Defects. Coming up with a new product often takes hours of research and development. Even after investing plenty of time and resources in a new product, there is still the potential of defects appearing long after production. Product liability insurance provides cover against oversights in the final product that may make it unsafe for public use.
- Cover Against Design Defects. Unlike manufacturing defects that occur post-production, design defects happen during the development phase of the product. Design flaws make the product innately unsafe since its inception. Customers can then sue your company based on products that have been improperly designed. Product liability insurance provides cover against any design flaws that may result in harm to customers or property.
- Cover Against Packaging and Warning Omission. Once you’ve successfully developed your product, you may unintentionally fail to provide sufficient instructions or defect warnings. In such an event, your company can face significant legal backlash resulting in massive financial implications. Product liability insurance litigates against these kinds of claims, ensuring your business stays afloat.
Is Product Liability Insurance a Legal Requirement?
Taking out product liability cover isn’t a legal requirement, but it is advisable. Often, manufacturers, distributors, suppliers, and retailers you work with prefer you have a policy in place. If your business is at fault for damage to property, bodily injury, or even death, customers can take legal action against you. Product liability insurance covers your business against any unforeseen mishaps and consequent financial implications.
How Much Product Liability Insurance Do You Need?
It comes down to the nature of products you sell and the potential size of future compensation claims. Compensation claims can be very high if you take into account factors such as repair costs, medical costs, or loss of income due to injury. It’s best practice to consult your insurance provider for a more accurate assessment of how much cover your business needs.
Life is unquestionably volatile, and as a business owner, it’s essential to prepare for any situation. Product liability insurance is your best guarantee against unforeseen legal implications resulting from products you manufacture or sell. With a product liability cover, enjoy protection against claims and ensure the longevity of your business. Get your business covered today for a less stressful tomorrow.
