What is product liability insurance,
and why do you need it?

Does your small business produce or sell any kind of product online or in a store? If the answer is yes, then you need product liability insurance to help protect your business against potential losses.
Because you’re responsible for every product you make and sell, if one of those products is faulty, or causes some sort of injury, your business could be held financially responsible for the consequences that follow. Product liability insurance can help mitigate the losses from these types of situations.

What exactly is liability?

For a small business, liability refers to your company being responsible - in the eyes of the law - for damages to a third party. Whether you’re a startup just getting your business off the ground, or an established businessperson with years of experience - you can be exposed to a variety of liability risks. In fact your business may not even do anything wrong, but you could still find yourself embroiled in a lawsuit. Having proper insurance coverage for your business and its products can help mitigate the losses you could experience from any liability claims.

OK, so what is product liability?

“In the simplest terms, product liability insurance protects business owners against the costs associated with damages caused by their products.”

Product liability refers to a situation where a customer buys a product, then an issue with the product causes a bodily injury or property damage to a third party. Small business owners could be found financially responsible for the damages if the source of the issue is traced back to their business. Some common issues that result in product liability claims include:
· Products that cause bodily injury to the customer.
· Products that cause property damage.
· Sickness caused by food or beverages.

Many factors can lead to product issue, but three of the more common reasons are:
· Design defect: An issue that is present in a product before it’s even made, it suggests the design is unsafe or faulty.
· Manufacturing defect: Something that went wrong during production, such as incorrect assembly or missing an important piece.
· Marketing defect: Referring to how the product was marketed to the customer, rather than an issue with the product itself. Common marketing defects include incorrect labelling, incorrect safety warnings (or lack thereof) or insufficient instructions.

Do you need product liability insurance?

As a small business owner, you should ALWAYS protect yourself from the risk of product liability claims. The second you begin selling your product you’re at risk for product liability lawsuits. Product liability coverage is important for any small business that produces and sells a product, including:
· Bakeries                          · Clothing stores
· Coffee shops                   · Florists
· Gift shops                        · Pet stores
· Print and copy shops       · Restaurants
· Specialty food stores       · Wholesalers

And remember: business-to-business operations are also at risk for product liability claims. You need product liability insurance coverage if you produce a product to sell to other business owners. This could include equipment or raw material suppliers.

“The right product liability policy will help protect your business from legal costs if you’re found responsible for a product causing bodily injury or property damage to a third party.”

About TruShield.