You never know when something will go wrong with your product or business. Every business owner’s nightmare is dealing with lawsuit because their product was not up to par and it can be worrisome. Your products run the risks of manufacturing defects, design defects, and labeling defects (specifically lack of warning or direction). The last thing you want to do is run your business without a safety net and deal with expensive third-party claims on your own. You can be proactive by carrying product liability insurance. What is product liability insurance? Let us explain and run through our 101 about coverage.

Here we go!

 

What is product liability insurance?

 

Product liability insurance is designed to respond to third-party claims, such as manufacturing defects, design defects, and labeling defects. Let’s say a customer experiences food poisoning after eating your product and they take you to court. Depending on the covered claim, insurance may help with lawsuit costs and assist with fees you may be held liable for.

What does product liability cover?

Manufacturing defect

 

This type of defect occurs during the product process and makes the product unusable. For example, your product contains traces of chemicals and a customer consumes a tainted batch.

Design defect

 

This type of defect applies to the actual design of the product and is deemed unsafe. For example, your supplement bottle isn’t designed with the proper child safety lock and a customer has to take their child to the emergency room for consuming too many pills.

Label defect

 

This type of defect applies to products that fail to provide proper warnings or instructions. Lack of informational labels means that the chance of something going wrong while handling the product is increased. For example, the label doesn’t specify that the supplement shouldn’t be taken while operating machinery.

What do all these defects have in common?

The chance of a lawsuit! As much as you would love to be included in every aspect of the manufacturing process to delivery, there is always a possibility of something going wrong and a third-party suing you.

Real Product Liability Examples

Infographic showing numbers from several real world lawsuits

Why do I need product liability insurance?

While there are many reasons why every business owner should carry product liability insurance, we would like to break down two reasons and hope you’ll consider coverage.

First of all, think of all the time and money spent on making your business come to life. It’s a lot of hard work and effort! If your business faces a lawsuit due to a product defect, your hard work could go down the proverbial drain and you could be in a great deal of financial strain. Lawyers can charge from $255 to $520 per hour (depending on their experience and expertise) and it can quickly add up to thousands of dollars of legal help. With product liability insurance, your business has a financial safety and can respond to risks your business faces every day.

Second, you’re going to need coverage if you want to sell your product in retail. Retailers like Target, Walmart, Rite Aid, and Albertsons (to name a few), won’t work with business owners who can’t provide proof of product liability. Retailers could require that you have at least $1 million dollars of coverage. With us, we can write policy limits up to $100 million and provide you with proof of coverage.

Product Liability Insurance From Canopy

We hope our product liability 101 was beneficial and you’ll consider us for your business insurance needs.Since you can’t oversee every aspect of your product line, the next best thing is having product liability insurance to pick up the slack and give you peace of mind. At Insurance Canopy, we pride ourselves on being able to write policies for all sorts of businesses, such as supplements, beauty and cosmetics, e-cigarettes, and more! Whether your business is big or small, don’t count yourself out and get coverage tailored to fit your needs. Our licensed agents have over a decade of experience and can walk you through the process.

Get Product Liability Insurance