- October 25, 2018
- Posted by: oneplacefinancial
- Category: Business Insurance, Tips
Afraid of the product liability claims that threaten to destroy companies? Don’t have an insurance plan for your business liabilities yet? This is just what you need to read!
What Is Product Liability Insurance?
A form of business insurance, this particular policy is designed to protect your company from claims and lawsuits pertaining to faulty products and damage caused by them. These lawsuits can be made on the basis of a defect in the product design, product malfunctioning, inadequate instructions or warning labels, and injuries and damage caused by the particular product. Such claims can be very detrimental for your company, putting its reputation at risk as well as costing a hefty amount of money for the customers’ damages.
This is where this subcategory of the business insurance policy comes in. Also known as “Products-Completed Operations Insurance”, it protects your business from charges made against the manufacturing and distribution of products, and covers legal fees, medical costs, and other damages sustained by customers.
What Does The Insurance Policy Include?
There are quite a few complaints that may lead to product liability claims. Negligence, breach of warranty, and strict liability policies are all reasons enough for filing third-party complaints and these are largely based on the following aspects:
According to this complaint, the fault in the product was due to an inadequate production process, which led to it malfunctioning. This implies that the unsafe product was a direct result of the manufacturing process and the insufficient precautions taken and trials conducted.
There might also be a complaint made regarding the overall design of the product. Customers may argue that the design of the product is intrinsically unsafe and unfit for use, and the faulty design is what caused all that damage in the first place.
Insufficient Warnings or Instructions
Complaints may also be made against the inadequate labeling and instructions, or lack thereof, which came with the product. This fault is mostly leaned towards the packaging, marketing, and advertising teams involved in the post-production process. Consumers may claim that the product did not have sufficient labels warning against certain aspects, which led to irrecoverable damage on their end. The company can be sued for keeping relevant information hidden in cases like these.
Why Does Your Business Need It?
Irrespective of whether or not your company manufactured a defective product, you are responsible for what you sell and distribute in the market. By representing a certain product, you’re essentially taking responsibility for its safe and effective use, and implying that the product is fit for consumption. In fact, you can even be accused of alleged negligence for placing a certain (defective) product in the commerce stream even if you did not manufacture it.
Why risk getting sued for a product you did not know was defective?
Being insured for all your liabilities is the wise thing to do to prevent getting into financial trouble in the future. One Place Financial all sorts of insurance solutions, and will help you secure your finances. Visit our office in Bellflower, CA or give us a call at (562) 867-5200 to learn more about our general liability & business insurance packages!