Firearms Insurance Agent Blog

What is Product Liability Insurance?

If you haven’t heard of product liability insurance before, then it might be a little confusing to you. Product liability insurance will protect a business from claims that are made in relation to the manufacture or sale of products, food, medicines, or other goods that are made public.

This covers the liability of the seller or the manufacturer of any illnesses or losses of the buyer, user, or bystander occurring from the malfunction of product. In some cases, it also covers a defective design or the failure to warn of side effects.

Potential Liabilities It Covers

Some of the products claims that a company may face include:

Flaws in Manufacturing or Production: Some part of the production process created an unsafe defect in the product. An example of this claim would be the use of dangerous chemicals in the process of making a product.

Flaw in the Design: This is when there is a claim that the design of a product is not safe. One classic example of this is the series of Pinto car cases against Ford in the 70’s.

Flaw in the Warnings or Instructions: This is when a product is not properly labeled or there were not sufficient warnings of the risks to the consumer. One example of this is the McDonald “coffee case” where they were sued because the cup did not say the product was hot and could potentially burn the consumer.

Most often the damages awarded in these claims included medical costs, compensation, and in some other cases would cost attorney fees as well. Product liability claims have in the past put businesses out.

Who Should Be Purchasing This Insurance?

The simple answer to this question is: anyone who is manufacturing or selling a product. However, resellers, retailers, and some commercial sellers fail to purchase this type of insurance.

Oftentimes they believe that since they did not manufacture the items, they do not need the coverage. However, manufacturers are not the only ones who fall prey to these types of lawsuits. If your company had any participation in distributing the product, then you can be held accountable for whatever damages may occur to the consumer.

If you are in need of product liability insurance, call the Firearms Business Insurance Agency.