If
you are introducing a new product to the public, either of your own
design or your supplier’s, then you have an exciting time of discovery
ahead of you. Watching the results as your product finds its way into
the homes of all your customers, and seeing the difference that it makes
in their lives, is powerful. Although, if you manufacture, design or
sell a product, and it is found to be defective, dangerous or lacks
proper package warnings then the product could be a liability claim
waiting to happen.
By including product liability insurance in your business plan, you
can ensure that you get the coverage you need before your product hits
consumers’ shopping baskets.
What Product Liability Insurance Protects
There are three incidents that a product liability policy will protect designers, manufacturers and retailers from:
- Design defects: No matter how many tests you run on your product designs, it’s possible that you missed some angle that makes your design unsafe.
- Manufacturing defects: If the wrong materials are used when making the product or the production process results in a defect that could damage an individual, then you could be liable for damages.
- Marketing defects: Manufacturers have a responsibility to warn customers about potential dangers in their products. If the products you make or sell lack sufficient warnings, you could be sued for damages.
Some might wonder why a retailer could be held responsible for
damages that are the fault of a manufacturer or designer. In some
states, they may not be, but in other states, retailers will be held
liable for at least some portion of damages because they will be
considered negligent by introducing these products to their customers.
If the product manufacturer has coverage for vendors built into their
policy, retailers may not need their own.
The premiums you pay and the coverage you qualify for will be
partially dependent on how high risk your product is and whether or not
you’ve had claims in the past. It’s important to remember that a general
liability policy may not have sufficient coverage for product liability
and may even exclude it entirely. If you aren’t sure whether or not
your current policy will hold up in the face of a claim, give us a call
at (800) 362-2809. We can review your Houston liability insurance policies and offer guidance on keeping your company, and your assets, secure.
