Are you a business entrepreneur? Are you involved in selling consumer goods to customers? Have you ever thought, if in any case the customer comes back to you, with a complaint or feedback for your faulty product that may or may not have hampered your brand identity or caused any damage to the customer. In these cases, you need to protect yourself from any possible damages for which product liability insurance is necessary.
Product Liability Insurance
Product liability insurance protects you in the event your product hampers or causes any injury or damage to a person or property. If the person files a complaint or raises a question, even if you are not the manufacturer, you will be legally liable to pay compensation to him/her for their loss and it will generally be very high. Hence with this insurance, the compensation cost will be covered if a third party suffers any loss because of a faulty product designed, manufactured or supplied by your company.
There are high chances that you will be liable for compensation if your company name is on the product, your company changes or repairs a product, you imported the product from abroad, if you are unaware of the product’s manufacturer and he has closed his business.
Premium for product liability insurance vary; if the product pose lesser threat then premium is less and if the threat is high and risky then premium will be high.
Products that require product liability insurance
Any product, be it consumable or non-consumable, once introduced into the market you will need to take the necessary cover against it. Food, clothing, energy products, furniture, stationary goods, luggage, beverages, pet items, baked products, tools, vehicles, electronic goods, toys, heating and cooling apparatus etc. are just some of the items which will need product liability insurance.
Product liability insurance coverage
- Personal injury caused by a defective or damaged product
- Loss or damage to property caused because of your defective product
- Unforeseen circumstances where the defect in the product could not be identified by your company’s quality control
In case where you did not manufacture the product but only sold it, then you will be eligible for protection from product liability insurance if you can prove that;
- the products were defective and damaged while you received them
- you warned and gave adequate safety instructions to the customers about its misuse
- you included the closure or terms and conditions for returning the faulty products to the manufacturer
- if your supply contact with the manufacturer covers product safety, quality control and returns.
- If you have an accurate record keeping system and quality control
Product liability insurance does not cover
- Loss or damage caused due to bad skills of workers
- Financial loss encountered due to a faulty product
