Product Liability Insurance
It is impossible for a business owner to predict when a product will fail. However, the best business owners know that recalls, product failures, and defects occur and take the proper steps to protect the company and the company’s customers should these issues occur. The easiest way to add protection against a defective product is to purchase product liability insurance for your business.
Product liability insurance is a vital policy that protects your business from claims made by customers if they are hurt by a defective product that your company manufactured, sold, or marketed. The experienced team at IPA Risk Management, LLC, can answer all of your questions and build a policy that protects your company at the coverage limits you choose. Call our Rochelle Park, New Jersey, office at 201.797.1084 to schedule an appointment with one of our brokers today.
What is product liability insurance?
In order to protect your business from the legal and financial consequences of a defective product, you need product liability insurance, which is a form of general liability insurance. This insurance policy helps to pay for the legal fees and court costs associated with claims of bodily injuries, financial losses, or property damage. Common examples that product liability insurance covers include the following:
- A customer suffers an injury because of the faulty packaging of one of your products
- A product a customer purchased from your company was highly flammable and led to a house fire
- A customer with a severe allergy finds tree nuts in your food product that isn’t listed on the ingredients
- A homemade house cleaner that you sell caused damage to a customer’s hardwood floors
- A customer at your restaurant gets sick and goes to the hospital after eating expired or old food
- The pet of a customer becomes sick after eating the lining of a toy your company manufactures
This is not an exhaustive list of examples, but some of the most common occurrences where product liability insurance is needed by a business to protect against claims. There are dozens of other ways in which a defective or malfunctioning product can lead to a claim.
What businesses need product liability insurance?
Again, not an exhaustive list, but here are examples of businesses that need product liability insurance:
- Beauty or fragrance sellers
- Businesses that sell appliances
- Children stores, including retailers selling toys, clothing, accessories, gear
- Clothing and apparel sellers
- Food manufacturers, wholesalers, or distributors
- Home improvement suppliers
- Pet stores
- Restaurants, bakeries, cafes, or specialty food stores
Common claims protected by product liability insurance
Product liability insurance can help protect your business from the following types of claims:
- Strict liability
- Design defects
- Defective or misleading warnings
- Manufacturing or production flaws
Exclusions of product liability insurance
There are exclusions of product liability insurance. This type of insurance is deemed third-party insurance, which means it covers claims made by third parties, such as your customers. People you employ who make claims against your business are not covered by this policy. Product liability insurance will not cover property damage or bodily injury caused by any of the following circumstances:
- On your business premises
- As a result of products still in your physical possession
- As a result of the transportation of your product
- As a result of crime or fraud
Does general liability insurance cover product liability?
There is a section in most general liability insurance policies called products and completed operations. For companies that do not have a focus on potentially hazardous products or that operate in low-risk industries, this coverage should be sufficient for your business. However, if your company sells or manufactures toys, cleaning supplies, clothing, technology equipment, or other products, a product liability policy is in your company’s best interest.
Concrete reasons to acquire product liability insurance
In case you still aren’t convinced that product liability insurance isn’t the best option for your business, take a look at these statistics from the United States Consumer Product Safety Commission:
- In 2016, an estimated 240,000 injuries caused by toys were treated in hospital emergency rooms across the country
- In 2013, there were an estimated 144 unintentional deaths attributed to CO poisoning in the country
- In 2018, there were an estimated 28,000 injuries treated in emergency rooms caused by appliances, televisions, or other types of furniture tipping over
Contact IPA Risk Management, LLC, for Coverage Options
Running a business comes with a lot of risks and rewards. Understanding your insurance coverage options does not have to be challenging when you work with the experienced brokerage of IPA Risk Management, LLC. We are conveniently located in Rochelle Park, New Jersey, and serve the New Jersey, New York, and Pennsylvania regions. Call our office at 201.797.1084 to schedule an appointment with a member of our team today.