Product liability insurance protects a business from being financially responsible for certain types of defective product or product liability issues. For instance, if a consumer gets injured due to a manufacturer’s product, the liability insurance may cover some or part of the legal costs as well as damages. The exact extent of the coverage will depend on the insurance contract terms.
Commercial insurance sometimes includes product liability clauses. However, a business owner may often choose to find a separate insurance package that covers specific product liability issues. This is often common for small business insurance coverage plans.
Product liability insurance is also common for businesses that do not directly produce or manufacture items. For instance, the business owner or operator may choose to apply for insurance for certain products that they stock or distribute.
As mentioned, product liability insurance coverage will vary depending on the individual contract between the business and the insurer. Most product liability insurance covers:
- The three main types of product liability claims, which are manufacturing defects, design defects, and warning defects
- Attorney’s fees
- Medical costs
- Various types of legal damages, including compensatory, economic, and punitive damages
Premiums, monthly rates, and other terms will often depend on several factors, including the nature of the products, volume of sales, and types of consumers involved. Some product liability lawsuits often have a potential to put an operation out of business, especially small business operations.
Thus, most businesses will seek out some sort of product liability insurance coverage. This type of insurance is important for any business that puts products “into the stream of commerce,” whether it be directly to consumer or not.
Disputes over liability insurance can often arise. These may involve claims such as insurance fraud, disputes over contract terms/coverage, and disputes involving payment of premiums. Such disputes may require a separate civil proceeding in order to resolve the conflict.
Product liability insurance can often be complex to deal with. You may need to hire a qualified business attorney if you need help understanding this area of law. An experienced attorney will be able to inform you of all your legal options in a way that is clear and easy to understand. Your attorney can help you review insurance claims, negotiate terms, and can file a claim if you have a legal conflict.