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What is Product Liability Insurance?
The public easily understands the concept of product liability because defective products have been regularly making the headlines. The most common scandals are food-related, from the issue of salmonella to tainted baby formula. Other risks that are highly commented upon are fires caused by defective batteries. In this context, most companies selling products are aware of the risks and the necessity to cover them.
It is your legal obligation that your product be safe for your consumer. If you are exporting your product to the USA or Europe, it is most likely that your client will require an insurance policy to protect against any claims there. Even if you have no obligation, and the risks are not obvious, it is wise to insure your product. Despite all precautions, there are chances that things may go wrong, especially if your product is sold to the general public. Moreover, even if the court considers your product as free from causing any harm, you would have had to spend time and money in order to protect the interests of your company.
What does product liability cover?
Product liability insurance protects against claims of personal injury or property damage caused by products sold, supplied or repaired by your business, and occurring outside of your premises. (If the damage is caused within the premises, then it is covered by the public liability insurance.) It typically protects manufacturers, distributors and retailers. Product liability insurance covers legal fees as well as compensation that may be result.
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