Liability Exposures and Manufacturers Insurance

Designing, manufacturing or distributing a product can be an exciting venture. However in our complex world, simply selling a product has become cause for concern, and moreover a product liability exposure. When a product sold by your firm injures someone, they will likely file a lawsuit against the responsible parties. A product liability policy, one type of manufacturers insurance, covers manufacturers, distributors, suppliers, retailers, and others who make their products available to the public.

Claims that are most commonly associated with product liability are negligence, design defect, manufacturing defect, a failure to warn about inherent dangers, strict liability, breach of warranty, and various consumer protection claims. Each type of product liability claim requires different elements to be proven to present a successful claim. Many wholesale and retail operations and venues, however, require that you as the manufacturer, distributor or wholesaler have products liability insurance on the items you develop.

What does manufacturers insurance for product liability cover?

Liability insurance is designed to protect the business against losses even if they are found to be negligent or liable for damage, injury or loss to another’s property. Typically, the insuring company pays damages, legal defense fees and settlement charges when a claim is filed against the business as a result of a liability suit. Products liability insurance will cover the insured for suits that arise out of damage or injury of use of a product that the holder of the insurance policy manufactures or sells.

If your company designs, manufactures, sales or distributes a component or end user product, you would be taking a huge risk by not having product liability coverage in place. This applies to any business or individual in the business of manufacturing his or her own product, even when the product in question is manufactured by a subcontractor or other entity. This includes an operation that resides overseas.

When purchasing manufacturers insurance for liability concerns the insurer will want to know, among other things, the type of product that you’re covering, its use and the target market, what materials were made to create the item, any claims made about the product and if it comes with detailed instructions. Ask your agent any questions you have about liability insurance and what amount may best fit your needs.

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