Does your company provide products to the consuming public? Then product liability insurance is especially meant for you. This insurance cover protects your business or company from claims that are related to sale or manufacture of products, medicines, foods and other products to the public. This type of insurance will normally cover your company for losses caused to a user or buyer due to product malfunction or defect. Losses could also occur to a bystander due to a flawed design in a building. Depending with what a company deals in, there are three types or claims that a company can face:
* Manufacturing flaws: This claim points to the fact that an unsafe defect, resulting to the product, was created by some portion of the manufacturing process. For instance, there have been claims against manufacturers in China in the recent past concerning presence of harmful chemicals in the products they release into the market.
* Design defect: This claim points to the fact that a product’s design is intrinsically not safe. This could especially occur to companies that deal in building, motor vehicles among others.
* Defective warnings: This claim indicates that an item or product was not properly labeled or else the labeling was not sufficient for the end user to comprehend the risk.
Some of the damages that will be awarded in the claims mentioned include the following: compensatory damages, medical costs, economic damages, and punitive damages. In a number of instances, it will even include the plaintiff’s lawyers’ fee. Product liability insurance is very important for every manufacturer. You cannot afford to take chances when it comes to claims on product liability.
Did you know that even wholesalers and retailers are affected by product liability claims? Most often, they will fail to acquire product liability insurance because they were not involved in the manufacturing process. Normally, the consumer will drag them into a product liability lawsuit for negligence on their part. Have you heard of the phrase ‘stream of commerce’? This phrase means that a company is held liable if it participated in process of making the product available to the user. This is very important to understand because ignorance of this may prove costly in the long run.
When it comes to premiums in product liability insurance, they are based upon factors like the type of product, volume of sales made as well as the role of the insured in the entire process. Sometimes manufactures under report the volume of sales or insure only a portion of the sales to lower the premiums. Do not try any of these because it will attract a penalty that comes due to under-insurance. Putting these tips in mind and taking the earliest opportunity to secure a product liability cover will put your company in a safe zone.