Product Liability Insurance Looking for a product liability insurance broker? Get the one who can give you peace of mind by ensuring that you and your business are always protected. In addition, it is important that the broker discusses insurance matters thoroughly with you for you to get the best coverage for your specific type of business.
Why Is Product Liability Insurance (PLI) Important?
Product Liability Insurance protects business owners against claims of injury or property damage that is caused by products sold or supplied through their business. If claims like these happen to your business, the Product Liability Insurance policy can completely shoulder all the legal expenses that may be brought about by a lawsuit. Persons who must get Product Liability Insurance include raw material suppliers, wholesalers, manufacturers, assemblers, importers, traders, dealers, equipment suppliers, website developers, software developers, bakers, and coffee shop owners, among others. Check for the following to assess usage safety:
- Design – Is the product’s design defective?
- Manufacturing – Does it have a manufacturing defect?
- Check if the product has defective assembly.
- Does it carry defective warnings or improper instructions about its usage?
If there’s anything wrong with your product and a customer buys it, it may:
- Cause injury to the customer’s body
- Cause damage to his/her property
- Cause him to get ill (ex. food and beverages)
In order for the injured party to claim damages, he must prove that:
- the product caused the damage or injury
- there was something wrong with the product and the defect was dangerous
- the injury or loss happened while the customer was using the product
- there have been no substantial modifications done on the product after it was purchased from the vendor.
Ensure that You Are Fully Covered by your Policy
Most Product Liability Insurance policies are designed to fully suit the insurance needs of most types of business. Ask your broker the right questions, so you make sure your business is fully covered for all the risks that it usually faces. Questions you need to ask are as follows:
- Who is covered by the policy?
- What are the exclusions of the policy?
- Are all my business-related activities covered?
- Does the policy cover third party liability?
For businesses that are engaged in manufacturing, selling, distributing or repairing products, they must make sure that their coverage is sufficient to shoulder higher legal costs. This is because cases that are related to products are the ones that get the highest penalties or charges. Because different policies carry different types of coverage, it is important that you read the fine print of the policy you are considering carefully. Be particular about terms that you are not so clear about and ask the broker to give you further elucidation of these terms. For example, the term “product” is defined differently in different policies. In general, the usual definition of the term is: anything that’s manufactured, erected, assembled, grown, processed, altered, treated, modified, repaired, labeled, bottled, supplied, sold, distributed or resupplied, exported or imported by you, or on your behalf. The policy under your consideration might be carrying a slightly different meaning for the term, so ask if you are not sure.
Examples of Product Liability Insurance Claims
Knowing some examples of actual claims may also help in product safety assessment. Here are a few examples:
- Suspect Labeling
One animal rights activist alleged that the nutritional supplements of a certain company are deceptively labeled. The claim was that the products were not completely vegetarian (containing meat and animal byproducts) as stated in the labels. The claimant said that she would proceed with a class action suit against all companies practicing false labeling.
- A Case Against a Hair Remover Company
In this case, the buyer of a facial hair remover claimed that when she used the product, mucous started to form inside her eye and she also suffered from eyelid discoloration. The manufacturer denied the allegation by saying that the problems were caused by an unrelated infection.
- Erroneous Warning
This is a classic McDonald case where the customer sued the company for not warning that the fast food store’s coffee cups are warmer than the usual cup. The claim was that the McDonald cups were more than 45 degrees Fahrenheit warmer.
- Dunk Tank Game
You might have seen one of these dunk tank games played at a carnival. A group leased one of these tank games for their yearly festival. While the game equipment was in use, it broke down, and harmed the person inside it.
- Low Drug Dose
In this case, a woman received an incorrectly mixed dosage of her thyroid medicine. According to her, she experienced musculoskeletal pain and suicidal tendencies because of the drug. Although it was a pharmacist who committed the mistake in giving the woman only a tenth of the required dosage, the manufacturer who made the medicine was also named in the suit.
What Does the Standard Product Liability Insurance Cover?
The following are covered in standard Product Liability Insurance policies:
- Bodily injury: Product Liability Insurance will cover hospitalization, lost wages, payment for death and legal fees if your case goes to court.
- Property damage: Product Liability Insurance will cover the value assessed of the damaged property, or repairs, profit loss and legal charges should you be taken to court.
What is Not Covered by a Product Liability Insurance Policy?
For one, these policies don’t cover product recalls. If you want coverage for product recalls, you can buy a separate policy for it. However, you will shell out quite a sum of money for this, as this additional policy is quite pricey. The same can be said for separate policies covering trademark infringement. Any accidents that might happen to you as the business owner in the performance of business activities are not covered. A general liability or a personal insurance policy is what you need for this. Injuries to workers of your company that take place during performance of their job are not covered. These are covered by worker’s compensation insurance, which you need to have as an employer. Costs incurred in defending defamation charges (slander or libel) that are leveled against you or your business are not covered as well. Cases like this are also covered by general liability insurance policies.
How Much Coverage Do You Need?
To determine the right coverage, consult with an insurance broker who works with different insurance companies. This is the type of insurance broker you need for all or most types of business. Because one major lawsuit can wipe out a small business, it is important that you get coverage for both product liability and general liability. That will be no less than a million bucks on the primary policy. Since the society we live in is definitely litigious in nature, a supporting policy can give you additional millions of coverage at a low extra cost. A good broker will help you get the right policy for your needs after he’s done comparing offers from several insurance companies.
Insurance Broker vs. Insurance Agent
It is important that you deal with an insurance broker rather than an insurance agent for the following reasons:
- An insurance broker works for his client rather than insurance companies.
- Agents only act as sellers of a variety of insurance products, while brokers are specialists in risk management. Brokers serve in behalf of clients and show them what is appropriate to insure and what is not.
- Brokers help their clients to achieve smooth processing of claims.
- Brokers represent multiple insurance companies while agents work only for one company. This multiple-company advantage allows brokers to connect their clients with the perfect insurance for their business.
- Brokers have future opportunities to include or reject new products from the companies they work for, whereas agents are “locked in” with the products that their carrier offers.
This broker advantage can work well for your business because in the future, you might need to purchase new insurance for additional business opportunities. You can have more and more insurance options as you grow your business with an insurance broker.
- Brokers can give lower insurance rates for their clients. This is because insurance company carriers trust the skills of these professionally trained people and because brokers can lead their clients to the policy that best suits them. For these advantages from using brokers, insurance companies provide these professionals with lower rates.
- An insurance broker has the ability to answer specific questions of his clients one-on-one. With this advantage, it is easy to develop trust with brokers and feel secure with regard to client personal information.
Product Liability Insurance: Call Fleurieu and Hills Insurance
Get in touch with the professional team of brokers at Fleurieu and Hills Insurance. They are committed to getting the most appropriate insurance policy for small businesses. If you’re worried with what might happen in case you will file your insurance claim in the future, it is a good idea to consider getting our services right from the get go. We are manned by some of the best insurance claim negotiators in the country. We will make sure that you get prompt and fair settlement. Call us now, and get the policy that is suited for your business.