Product Liability Insurance policies protect your business (and the goods you make) from claims that the design, manufacturing or sale of your product caused physical injury or property damage.
There are 3 typical “Product Claims” a business could face:
Defective Warnings or Instructions
In other words, a claim that your product was not properly labeled, or had insufficient instructions that clearly let the consumer know the risks of using your product. One famous example would be the “Hot Coffee” lawsuits, where customers brought forward injury claims from serious burns caused by hot coffee in flimsy Styrofoam cups.
Manufacturing or Production Flaws
Any claim stating that the production process within your business created an unsafe defect in your product. Car manufacturers often see this claim after injuries are brought forward from faulty alignments or ignitions that were not properly calibrated during production.
Product Design Defects
A claim that the design of the product is unsafe. Toy companies face these suits often when a product design is not fully checked for safety and a toy is made with small loose parts that present choking hazards.
We know that you would never intentionally build a harmful product, but in the event that an error occurs, your business needs protection against liability for losses or injuries to your users caused by a defect or malfunction in your product.
Wouldn’t these things be covered under a General Liability policy?
As part of a commercial general liability policy, this coverage is often referred to as Products-Completed Operations Insurance. However, this may not be standard for all GL policies, so give us a call to review your current coverage and come up with a plan that truly keeps you safe.
Is there a statute of limitations on claims against my products?
That depends on the situation. For instance, if someone bought your product years ago (like a car) but an injury just recently occurred that is attributed to faulty manufacturing, you could be facing a lawsuit. That is why it’s always best to plan ahead and put a plan in place that covers all scenarios.
What if I use a 3rd party manufacturer to produce my designs, and a suit is brought against the production of our product? Is my business at fault?
The best answer we can give you is, possibly. A lot will have to do with the contracts you have setup with your manufacturer. We say this to let you know that problems can pop up when you least expect them. It’s best to have the protection you need in place, and then hope you never have to use it.