Product Liability Insurance

Protecting the Products You Sell

Specifically, as part of Commercial General Liability (CGL) policy, this coverage provides protection against liabilities for losses due to injuries caused by malfunctions or defects in your products – including design defects or a failure to warn consumers about the dangers of using a product.

Protection for Claims

Product Liability Insurance protects against the following claims:

• Manufacturing or production flaws that cause unreasonably unsafe defects in the product. For instance, there may be traces of dangerous chemicals in your product, which could be toxic to those using it.
• Design defects that make the product unsafe for use by the public.
• Failure to provide adequate defect warnings or instructions for using the product. These claims arise when products are not properly labeled or had warnings that were not explanatory enough to reduce consumer risks while using the product.

Depending on the outcome of the case, money may be awarded to the party that filed the claim for compensatory loss (including medical costs, economic damages and attorney’s fees) or punitive damages (designed to deter the defendant from repeating the action that caused the damage). At times, these cases can put organizations out of business because the awarded damages are so large.
Get a Liability Quote

Limiting Product Liability

Consider implementing these techniques into your organization to limit product liability:

• Develop a quality control program and distribute it to your employees. It should outline procedures for product safety, design, testing and inspection. It should also include information regarding traceability, guidance regarding customer complaints and a product recall program.
• Place serial or batch numbers on all products to ensure that they are traceable in case of a recall.
• Keep records of all information about your products, including testing, product performance, component percentages and complaints.
• Ask a legal professional to review warning labels, assembly and operating instructions, disclaimers, and any other information distributed to consumers. If you need additional assistance, consult a product safety specialist.
• Ask a legal professional to periodically review contracts and hold-harmless agreements for use with your customers and subcontractors. Ensure that these contracts limit the liability you will assume for a quality product. Also consider obtaining certificates for liability insurance from your subcontractors.