Product Liability Insurance is a special segment of the commercial insurance arena.
Does your business make a product? Do you sell or distribute products that may be re-labeled under your business name? Has product liability insurance coverage been removed from your business insurance policy by your insurance company because of the type, kind or characteristics of the product you manufacture? If you answered yes to any of these questions then you need to talk with our commercial team about securing or buying Product Liability Insurance.
What Is Product Liability Insurance?
Products Liability insurance protects the maker, distributor and seller of a product from bodily injury and property damage claims made against them when they are held legally liable for the injury or property damage.
There is always a chance that potential defects in a product may cause that product to fail to work correctly and cause resulting injury or property damage. For example a pharmaceutical manufacture may produce a series of drugs that have gone through the testing phase and been brought to market only to find that some consumers are allergic to the product and become ill when using it. Another example may be when a clothing manufacture produces a product that cause rashes when worn by consumers or a baking company produces a line of pastries that contain something that when consumed causes an allergic reaction by their customers. These are all examples of where Products Liability coverage come into play.
Who Needs Product Liability Insurance?
Here’s a short list of those who need to secure products coverage:
- If you sell a product that you have rebranded under your company name;
- When your company repairs and resells or repurposes the product;
- If your company manufacturers any product;
- And if your company distributes specific products.
Here’s a sample of businesses that will require special Products Liability coverage:
- Medical Device and Equipment
- Drug and Pharmaceutical
- Cosmetics and Beauty Products
- Clothing Products – Including Children
- Baby Care Products
- Chemicals
- Products designed for use in Vehicles, Boats, Recreational Vehicles, Motorcycles
- Recreational and Sports Equipment
- Aviation Products
- Nanotech Products
- Products designed for use in Industrial Manufacturing Operations
- Technology and Electronic Equipment
- Health, Wellness, Nutrition and Lifestyle Products
How does Products Liability Insurance work?
Consumers of your product can be injured from a variety of sources. These sources include how the product is manufactured, how it is designed, how it is brought to the market place and even if it is used incorrectly. Yes, you can still be responsible simply if your product is used in a manner that it was not intended to be used.
As the maker, distributer or seller of a product, you are exposed to lawsuits brought against you for the damage that individual product causes. If your product is distributed to a large number of consumers, think about an over the counter drug, you could be subject to damage claims from many individuals with the possible loss of millions of dollars. All of those in the chain of distribution of your product may be exposed to potential product liability claims or lawsuits alleging damage and injury caused by your product due to a product defect or use.
Products Liability coverage will provide you with specific protection for those kinds of loss. A Product Liability policy will also provide protection from failure to provide appropriate instructions for use and other warnings about your product.
Doesn’t my standard General Liability policy include Products coverage?
It’s true that most standard general liability policies do include product liability insurance coverage. You’ll find that for most small business operations, main street types of stores, retailers and most all service types of business their business insurance program, more specifically their standard general liability policy, will include products liability coverage.
Because what happens is that when a manufacturer develops and produces certain types of products that may be more hazardous than others you’ll find that insurance companies will want to limit their exposure and possible financial loss to those exposures the product may present. In simpler terms, a standard insurance company will not want to provide insurance that covers the product.
Take a look again at the list of products shown above. It’s these types of products that will always require special handling.
An insurance company may still like to provide insurance coverage for the manufacturers building, equipment, stock and inventory along with the premises and operations liability insurance. Premises and operations liability coverage does not include products coverage.
Typical Coverage Highlights Available:
- Deductible Options and Self Retention Limits Options
- Vendors Endorsements
- Additional Insured Status
- Coverage for Specific Product Only
- Claims Made Policies
- Occurrence Policies
- Primary and Excess Liability Limits Available
What are the Costs Associated with a Products Liability Law Suit?
It’s a well known fact that, with the exception of professional liability claims, product liability claims and jury awards for those claims are the most costly of all other liability claims. It’s reported that the average products liability award for damages in 2015 was $4.8 million. Most product cases are settled out of court. However the associated legal costs of processing a products liability case can easily exceed $100,000.
Needless to say, a single product liability claim can easily bankrupt many small manufacturers and product distributors and sellers.
What Information Do I need to Provide to Get a Quote?
It really depends on the specific types of products your company produces. Again, refer to the above list of products. Products that are potentially more hazardous to the consumer will require much more detail regarding design, development, testing and manufacture of the final product. Pharmaceutical, drug, medical equipment and device items will require FDA approval. All testing and submission information provided and received from the FDA on your specific product will be required for these types of products. Other products may require engineering reports and time in market along with production safeguards and testing data. More importantly remember that Product Liability Insurance will be underwritten on the basis of what your product does, what it contains and how it’s used. Regardless of the required information, we’ll have one of our Mid America Commercial Team members guide you through the entire process.
Why Should You Buy Product Liability Insurance From Mid America Specialty Markets?
If your business is located in Missouri, Kansas or the surrounding area you should have a discussion with one of our Commercial Team members about providing your Products Liability coverage. Our Commercial Team has the experience, knowledge and ability to provide your company with the solutions you need to identify and provide your company with the proper protection for your product. We work with high quality insurance providers to find the best fit of coverage and pricing to protect your bottom line.
How to Get Started
We make it as easy as possible to secure a quote from us. If you need to buy product liability insurance you can get started in the quote process by simply clicking on the Get a Quote button, complete the short information form and submit it. Your request will go to one of our Commercial Team members and they will quickly reach out to you to begin the discussion about how we may help!
Video Transcript:
Let’s talk about Products Liability Insurance. Hello, my name is Randy Sieberg. I’m the Director of Commercial Insurance and a member of our Commercial Team here at Mid America Specialty Markets.
Product Liability Insurance is a special area of commercial insurance. It’s a coverage that protects the manufacturer, distributor and seller of a product against law suits alleging bodily injury or property damage caused from defects and even miss-use of the product.
On this page of our website you will learn about:
- Product Liability Insurance;
- Who needs Products Coverage;
- How it Works;
- And why your standard General Liability policy may not include Products Coverage.
You’ll learn about:
- Typical Products Coverage that’s available in todays market place;
- And costs associated with Products Liability Law Suits.
Finally you will learn about what kind of information you will need to provide in order to secure a cost effective Products Liability Quote. And we’ll discuss why you should buy your coverage from Mid America Specialty Markets!
So, if your company manufacturers, repairs, repurposes, resells or distributes any type of product, contact a member of our Commercial Team or one of our agents in an office near you to see how we can help place this valuable coverage for your business!
Thank You!
