Costly Product Liability Insurance Claims
There are three categories of product liability insurance claims:
- Defectively Manufactured Products
- Defectively Designed Products
- Failure to Provide Adequate Warnings or Instructions
Defense costs alone can be crippling. Expenses include:
- Defense, litigation, and medical cost containment
- Expenditures for surveillance
- Litigation management
- Fees for appraisers, private investigators, hearing representatives, and fraud investigators
- Attorney legal fees
Trends Affecting Product Liability Losses
Losses associated with product liability claims are skyrocketing. Changing trends driving the severity of losses include:
- Larger jury awards and escalating verdicts
- Inflation of medical services
- Global sharing economy (multiple businesses working together to streamline risks blur the lines of product liability coverage)
Why You Need Product Liability Insurance
How Much Does Product Liability Insurance Cost?
Risk is determined by:
- Type of product
- Amount of annual revenue derived from the product
- How the product is marketed
- What safety measures are in place
Common Exclusions in Product Liability Insurance
- Quality control exclusion: You must oversee a certain level of quality control for your products.
- Reporting exclusion: You must report any changes in manufacturing such as new ingredients, materials, or components to your carrier.
- Efficacy exclusion: Your product may be excluded if it fails to perform its main function.
- Material exclusions: Some carriers have material or ingredient exclusions.
- Product recalls: Usually not included in product liability coverage, and may extend to damages arising from the withdrawal, inspection, repair, replacement or loss of use of an insured’s product should it be recalled.
What is Strict Product Liability and Why Does It Matter?
In strict liability, the plaintiff must only prove the following three things:
- A product was sold in an unreasonably dangerous condition;
- The seller expected and intended that the product would reach the consumer without; changes to the product;
- The plaintiff or the plaintiff’s property was injured by the defective product.
Defenses against strict liability are:
- The plaintiff used the product in a way that they knew could lead to injury or took an assumption of the risk (used the product despite knowing it was defective).
- The plaintiff’s own careless actions contributed to or were the cause of the injury. This could include using the product in a manner it wasn’t intended for.
- Some other person or event interacted with the product to such an extent that the product was not the real cause of the injury.
How You Can Manage Product Liability Risk
- Type of business
- Type of products
- Company value
- Geographic location
- Claim history
- Coverage limits
Other types of insurance you may need are:
- Excess or Umbrella Product Liability
- Commercial General Liability
- Commercial Property Insurance
- Errors & Omissions Insurance
- Worker’s Compensation Insurance
- Emergency and disaster preparation
- Collect data on manufacturing trends
- Benchmark risk along the way in production planning (include job safety protocols)
- Build improvement initiatives post-production
How to Buy Product Liability Insurance
Each business is unique and your product liability insurance needs may vary. This is why Insurance Canopy has representatives who understand various industries and can develop an insurance portfolio that will keep you protected from financial loss.
We specialize in the following industries, among others:
- Nutraceutical, Vitamin & Supplements
- Beauty & Cosmetics Products
- E-Cigarette and Vape Products
- Consumer Products
- Sporting Goods Products
- Industrial Products
- Product Recall
- Discontinued Products
- Medical Devices
- Food Products
- Clothing Manufacturing