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When a company manufactures a product, it’s important to protect against the possibility that the product might cause injuries or damage. Product liability insurance is designed to help cover these costs in the event that something goes wrong.
Product liability insurance can help cover the costs of legal defense, settlements, and judgments related to claims of injury or damage caused by a defective or dangerous product. Coverage may also extend to issues like false advertising and faulty packaging.
There are a few different types of product liability coverage:
- bodily injury coverage helps pay for medical expenses and other damages related to injuries caused by the product
- property damage coverage helps pay for repairs or replacement of property damaged by the product
- personal and advertising injury coverage helps pay for certain types of non-physical injuries, like false advertising or defamation
Product liability insurance is important for any business that manufactures, distributes, or sells physical products. It’s especially important for businesses that sell products that could pose a risk to users, like food, alcohol, and pharmaceuticals.
If you’re in the market for product liability insurance, be sure to shop around and compare policies from different insurers. Coverage limits and exclusions can vary significantly from one policy to the next, so it’s important to find a policy that meets your specific needs.
Does My new company or LLC need a Product Liability Policy?
If your business will be involved in the selling of any physical product, it is highly recommended to have some form of product liability insurance in place. This is especially true if you will be selling products that could pose a risk to users, such as food, alcohol, or pharmaceuticals.
Product liability coverage can help protect your business from the costs of legal defense, settlements, and judgments related to claims of injury or damage caused by a defective or dangerous product. Coverage may also extend to issues like false advertising and faulty packaging.
There are a few different types of product liability coverage:
- bodily injury coverage helps pay for medical expenses and other damages related to injuries caused by the product
- property damage coverage helps pay for repairs or replacement of property damaged by the product
- personal and advertising injury coverage helps pay for certain types of non-physical injuries, like false advertising or defamation
When shopping for product liability insurance, be sure to compare policies from different insurers. Coverage limits and exclusions can vary significantly from one policy to the next, so it’s important to find a policy that meets your specific needs.
What Does Product Liability Insurance NOT cover?
Product liability insurance typically does not cover damages caused by normal wear and tear, intentional misuse of the product, or damage that occurs after the product has been sold. Additionally, most policies exclude coverage for certain types of products, such as vehicles or firearms.
It’s important to read the fine print of any product liability policy before purchase, so you know exactly what is and is not covered. This will help you avoid any surprises down the road if you need to make a claim.
How much Does Product Liability Insurance Cost?
The cost of product liability insurance depends on a number of factors, including the type of business, the products sold, the manufacturing process, and the coverage limits. Generally speaking, businesses that sell higher-risk products (like food or pharmaceuticals) will pay more for coverage than businesses that sell lower-risk products (like clothing or office supplies).
There are a few ways to reduce the cost of product liability insurance:
- Raise your deductible: A higher deductible means you’ll have to pay more out of pocket if you have a claim, but it also means you’ll pay less in premiums.
- Choose a policy with lower coverage limits: This may not be an option for businesses with high-risk products, but businesses with lower-risk products may be able to get by with less coverage.
- Bundle your policies: Many insurers offer discounts for businesses that bundle their product liability insurance with other types of coverage, like property or liability insurance.
What are the Benefits of Having Product Liability Insurance?
There are a few key benefits of having product liability insurance:
- Protection from financial losses: Product liability claims can be very expensive, and without insurance, you could be on the hook for the entire cost of a settlement or judgment.
- Peace of mind: Knowing you have coverage can help you sleep better at night, knowing that you’re protected in the event that something goes wrong.
- Attracts customers: Many businesses require their suppliers to have product liability insurance, so having coverage can help you win new business.
- Helps you comply with the law: In some states, product liability insurance is required by law for certain types of businesses.
How Can You Get a Product Liability Insurance?
There are a few different ways to get product liability insurance:
- You can purchase a policy from an insurance company.
- get coverage through a business owner’s policy (BOP), which is a type of insurance that bundles together property, liability, and other types of coverage.
- get coverage through a manufacturer’s or distributor’s agreement. These agreements typically require the manufacturer or distributor to provide product liability coverage for the products they sell.
When shopping for product liability insurance, be sure to compare policies from different insurers. Coverage limits and exclusions can vary significantly from one policy to the next, so it’s important to find a policy that meets your specific needs.
Frequently Asked Questions:
What is product liability insurance vs general liability?
Product liability insurance is coverage that protects a business from damages caused by its products. General liability insurance is coverage that protects a business from a variety of risks, including property damage, personal injury, and advertising injury.
Do I need product liability insurance if I have general liability?
No, you don’t need product liability insurance if you have general liability insurance. However, you may want to purchase both types of coverage to ensure you’re fully protected from all risks.
What is the difference between product liability and professional liability?
Product liability insurance protects a business from damages caused by its products. Professional liability insurance, also known as errors and omissions insurance, protects a business from damages caused by its professional services.
Do I need product liability insurance if I don’t manufacture products?
No, you don’t need product liability insurance if you don’t manufacture products. However, you may need it if you sell, distribute, or repair products.
What is the difference between product liability insurance and automobile insurance?
Product liability insurance protects a business from damages caused by its products. Automobile insurance protects a business from damages caused by its vehicles.
Overall Product Liability insurance is a type of insurance that protects businesses from damages caused by their products. There are many benefits to having product liability insurance, including protection from financial losses, peace of mind, and the ability to attract new customers. You can purchase product liability insurance from an insurance company, or you may be able to get coverage through a business owner’s policy or a manufacturers’ or distributors’ agreement. Be sure to compare policies from different insurers before you purchase a policy, as coverage limits and exclusions can vary significantly from one policy to the next.
This article is for informational purposes only and does not replace professional advice. Please consult with your insurance agent or broker to ensure you have the coverage you need.