What is product liability?  

Product liability insurance protects businesses from losses related to liabilities from products that they sell or manufacture.

Product liability is the liability of the producer, distributor, or seller of a product that causes damage or injury to its user. This liability holds businesses responsible for the damage caused by a product they produced or sold. In such a case, one needs to opt for

In the case of a strict product liability lawsuits, a legal article on HG.org states that the jury judges the legitimacy of the claim based on two defect tests. Such as:  

  • Consumer expectations test:  It examines how dangerous the product is to ordinary consumers with substantial knowledge of the product.  
  • Product risk-utility test:  It measures the utility of the product against the risks it poses.  
product liability insurance

What is product liability insurance?  

Product liability insurance is an insurance that provides coverage to manufacturers, and distributors for any property damage and bodily injury that a product can cause. For instance, whether it is getting injured by construction equipment or slipping on marble because of fuzzy slippers, defective products could cause severe injuries to the users. Then in such a case, consumers have the right to sue the company that produces or sells a product that causes injuries to its users. Hence, product liability insurance is a must for companies that deal with producing and selling any kind of product. 

What does it cover?  

Product liability insurance covers the company’s legal and defense costs in case a consumer sues the company for product defects. Such as:  

Faulty product:

Mass-produced products have high chances of defects due to manufacturing errors. Sometimes, these defects happen due to human error as well. The mistakes make products faulty, which could cause harm to consumers.   

Usage failure:

Despite making prototypes and doing test runs of the products, some products may not work as expected. Therefore, consumers may suffer from injuries when they experience a malfunction from using the product. 

Design defect:

Most products go through the research and development phase. However, it doesn’t guarantee that the product is perfect. Overlooking some design flaws of the product can cause some grave damage to users. 

False marketing:

Companies utilize marketing campaigns to sell their products with overselling taglines. In some cases, these marketing tactics are gimmicks to get consumers to buy the product. False marketing can cause damage to consumers who use products that don’t perform as expected.  

False labels:

With the principle of caveat emptor, consumers overall refer to product labels for detailed information to make their buying decision. Products with incorrect information on their labels can lead to dire consequences for the consumers. 

product liability insurance

Failure to warn:

The packaging of products includes product labels to safeguard the consumers from damages that the product may cause. In some cases, consumers can suffer an injury or loss when the product warning is unclear.

Product information omissions:

Many manufacturers have found loopholes in the requirements set by the Food and Drug Administration (FDA). Despite operating within the law, these loopholes can still cause damage to consumers due to purposeful omission of information.