Product Liability Insurance for your Manufacturing business
Product Liability Insurance helps towards covering the cost of compensation, including any legal fees if someone is injured, or their property is damaged, because of a product that you have designed, manufactured, or sold. Product Liability Insurance for manufacturers is an essential cover for any business that sells or manufactures products, but is rarely sold as a standalone product, and often goes hand in hand with a Public Liability policy.
A product liability claim could include anything from injuries or illnesses caused by defective medical devices, medical implants and pharmaceutical drugs to injuries caused by defective appliances, contaminated cosmetic products or accidents caused by defective vehicles.
Why you should consider Product Liability Insurance
Manufacturers must consider their product liability exposure during every stage of a product’s lifecycle. Some products may be used or consumed very quickly but if an injury or illness occurs because of the product, it may take a long time to discover the root cause. Other products are manufactured with the intention of long-term use and therefore, a claim may not be made against the product until years after it is sold. This means as long as your products are in the hands of the public, your exposure to product liability is always present and unpredictable, which is why it is vital to have robust and continuous Product Liability cover.
Although Product Liability cover is not a legal requirement, it is often required by suppliers and/or vendors and is recommended for every part of a given supply chain. This is because, sometimes when a claim is made, all parties in the supply chain can be named as liable, regardless of whether every part of the chain is at fault.
If a defective product has been sold, you could have to pay out large sums in damages and even if you are successful in your litigation, the legal fees can still pile up. Alongside this, if the products are being sold worldwide, you may be exposed to numerous legal systems, where legal fees can be highly inflated.
Risk Management for Manufacturers
While manufacturing defects are the biggest cause of claim, you could also be liable for design defects or failure to warn.
Risk management procedures must be put in place at the product design stage, and could include a hazard analysis to determine possible ways in which the product user could suffer injury or incur damage at their property.
During the analysis process, you can investigate both the intended uses, as well as any anticipated misuses. Safety features may need to be designed in such a way that an end user cannot easily remove or modify the product. Clear labelling and instructions are also important as any guidance given could be argued to be inadequate, misleading, or confusing, and could result in a product liability claim. Despite precautions like this being taken, even companies with the most rigorous quality control measures, may still sustain product liability claims.
What does it protect you against?
Although Product Liability Insurance often comes hand in hand with Public Liability cover, the two should not be confused as one and the same. While injuries caused from general business activities like slips or trips in a warehouse can be covered by Public Liability cover, any injuries or damage from a tangible product that has been manufactured, altered, distributed, or installed by you will only be covered by a product liability policy.
There are some instances your Product liability Insurance may not cover you, such as:
- faulty products resulting from bad workmanship
- financial losses to a business or person caused by your faulty product
Things to consider
When purchasing your Product Liability Insurance, there are some things you may want to consider. For example:
- Exclusions – you should check to see what your policy does and doesn’t include. This prevents your policy falling short if the time to make a claim comes.
- Stipulations – your product liability policy may include some demands you must adhere to, for example in terms of quality control.
This is where we can help. We know that sometimes lengthy documents with specific wordings can become quite tedious. That’s why our experienced advisers will take the time to get to know the way your business operates and can recommend a solution to protect you from financial losses as a result of product liability.
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