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Could A Product Liability Claim Bankrupt Your Business? You Bet! Why Product Liability Insurance Matters

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Did you know that the median jury award for product liability lawsuits in 2015 was $2.5 million dollars? When your business is part of the stream of commerce chain for products, you could be held liable for damages or injuries caused by a product you produce, manufacture, or sell.

Even if you have a strong quality assurance process to assess, identify, or predict potential hazards, a product you placed into the commerce stream may still harm somebody who interacts with it. Having product liability insurance to protect your business from potential lawsuits is an important component of your risk management strategy.

Types of Product Liability Claims

Defective Manufacturing Claim:

A claim that is made due to an error in the manufacturing process where a product may have caused injury to the consumer.
For Example:

In 2016, Johnson and Johnson was hit with a $543 million jury award in a case known as DePuy Orthopaedics Inc. Pinnacle Hip Implant Product Liability Litigation. Patients alleged that the metal-on-metal hip implants were defective. They claimed the cobalt and chromium materials leached into their bloodstreams. This caused patients to undergo secondary surgeries to remove the implants. The jury found that officials of J&J’s DePuy unit knew the devices were defective and failed to warn patients and doctors about the risks.

Defective Design Claim:

A claim based on the design of the product.
For Example:

Sacramento Kings forward-guard, Francisco Garcia was training with an exercise balancing ball while holding weights when the ball burst and he fell, causing his forearm to fracture. Due to the incident, he was unable to play for a portion of the NBA season. He filed a lawsuit against the company who manufactured the equipment for lost salary and damages. He contended that the balance ball should have been made with thicker plastic, noting that it had not been misused before it exploded.

Defective Warning or Instruction:

A claim based upon the labels or warning regarding the end user’s risk of the product. Sometimes this involves marketing or advertising claims.
For Example:

A jury awarded $850,000 to the parents of a boy who was killed by a baseball after it was struck by an aluminum bat. The court determined that the maker of the Louisville Slugger baseball bat”failed to adequately warn about the dangers the product can pose.”

What Does Product Liability Insurance Cover?

If a lawsuit were to come your way because your product caused harm to a consumer, product liability insurance may pay for:

  • Defense costs and legal fees
  • Medical damages owed to an injured party
  • Settlements
  • Financial damages

About Insurance Canopy

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Every business is susceptible to an accident. If your business is held liable for damages or injuries your product caused to a customer, the financial strain can be detrimental. Don’t let the unexpected expenses of a lawsuit wreck the business you have worked so hard to build. Protect your livelihood and let product liability insurance cover the claims.


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