Why small businesses need product liability insurance

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Product liability cover can vary, with claims depending on the individual business and the product it sells. Regardless, Product liability will ensure you are protected from the inevitable mishap.

Product liability can provide protection for property damage or personal injury claims arising out of the use of a business’s product, or the failure of a product.

Michael White, Steadfast’s broker technical manager, says claims are typically split into two types. “Personal injury claims are very common. In these cases, someone uses a product that’s defective in some way and is injured as a result.

The other type of claim relates to the use of a product that fails, causing property damage,” White explains.

There are a number of circumstances that are not covered by product liability insurance. One situation is when there is an economic loss as a result of a faulty product. Product liability insurance won’t provide cover if you sell a product and it doesn’t work, resulting in a business losing money.

An example would be the client sells a machine used to put caps on bottles. Let’s say the machine manufacturer claims the machine can cap 500 bottles an hour but in reality, it only caps 400 bottles an hour.

The claimant suffers a loss because its production is reduced. Typically, policies also won’t provide cover for the product itself. So if you sell a product and the product does not work and has to be replaced, the policy won’t respond.

This article from the Steadfast online magazine Well Covered, discusses risks of underinsurance, how to avoid mistakes and ensure homeowners have the right insurance in place, particularly in fire-prone areas.

Read the full article here