In today’s litigation-oriented marketplace, when a manufacturer’s tangible goods go bad (in the sense that they cause injury or damage), the results can have far-reaching implications for the company, from massive costs for defend against or pay claims, repair or replacement of the product, to business interruption, slowdown of future sales and loss of public credibility, reputation and goodwill, and more. When dealing with the substantial and myriad risks associated with a discovered defect in manufacturing, design, or marketing (in a failure to warn the user of a present danger), product liability cover is essential in protecting the financial health of the company.
Where do the claims stem from?
In most cases, lawsuits that are brought in this area are based on claims of negligence, strict liability (in which the manufacturer is held liable for a defective product even though no negligence occurred in the actual manufacture), breach of warranty, or on a consumer protection basis; each type of claim has different elements of proof to result in a successful day in court.
As part of the general liability policy when added, the coverage offers protection for your business from claims or lawsuits arising from the manufacture or sale of a faulty product which results in bodily injury or property damage to others, due to a defect or malfunction of the product. Should you be found liable, the coverage pays for legal fees, court costs and punitive or compensatory damages that you would otherwise have to pay out of your own pocket. Depending on the type of items your company produces (such as potentially hazardous items like drugs or insecticides), the coverage may need to be purchased separately from a specialty provider.
Don’t let a claim put you out of business
Whatever you manufacture, it’s important to also make a good call in selecting a professional insurance agent who specializes in this industry, as he or she will have specific knowledge (for example, understanding of risks that are not protected under certain coverages in the event your products that you export for use in foreign countries) and experience that will be effective in ensuring you have the right mix of coverage you need to ensure your risks are appropriately mitigated. Call an agent today to learn more about this important protection.