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Protecting Your Business with Product Liability Insurance

1/30/2023

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Starting or running a business involves numerous risks, especially when products are involved. One of the most effective ways to protect your business from potential liability is with Product Liability Insurance. In this blog post, we'll discuss what product liability insurance is and how it covers your business in various ways, as well as how much coverage you need and the associated benefits.
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What is product liability insurance?
Product Liability Insurance is a type of insurance that provides protection for businesses when their products cause property damage, bodily injury, or death to customers. It helps cover the costs associated with defending and settling claims against your business due to any losses incurred because of a product you have made, sold, or distributed. This includes damages related to design defects in manufactured goods; improper labeling or packaging; inadequate warnings; and breach of warranty. Without this coverage, businesses would be completely exposed in such cases and face devastating financial losses and significant legal fees.

What does product liability insurance cover?
Product liability insurance covers a wide range of potential claims related to the sale and distribution of products. These include any injuries or losses due to design defects, manufacturing defects, inadequate instructions or warnings, improper packaging or labeling, breach of warranty, and other similar issues. In addition to covering the associated legal costs, it can also provide coverage for damages awarded by a court in such cases. This type of insurance is critical for businesses that produce, distribute, or sell products as it helps protect them from financial losses if they are held liable for an injury caused by their product.

How much coverage do you need?
The amount of product liability insurance coverage you need will vary depending on the size and scope of your business. Generally speaking, the larger the business and its operations, the more coverage that is necessary. It would be best if you also considered factors such as expected sales volume, types of products sold or distributed, locations where goods are sold or stored, and any potential legal risks associated with those activities. It is important to speak with an experienced insurance agent who can help determine how much coverage is appropriate for your particular situation.

In addition to determining how much coverage you need in terms of dollar amounts, it's also important to make sure your policy meets all applicable state laws regarding product liability protection. These may include requirements related to minimum limits of liability as well as specialized provisions tailored to specific industries or types of businesses selling products. Taking the time to ensure you have adequate coverage can save you a great deal of money and stress down the road if there ever is a claim against your company due to a defective product causing damage or injury. It's also wise to consider Excess Liability or an Umbrella. 

What are the benefits of having product liability insurance?
The primary benefit of having product liability insurance is that it provides financial protection against potential lawsuits related to the sale and distribution of your products. This coverage helps to pay for legal costs and damages awarded by a court if you are found liable for an injury or loss caused by a product defect. In addition, this type of insurance can help protect your business assets from seizure, which would otherwise be used to satisfy any judgment against you. Finally, product liability insurance may also provide peace of mind knowing that your company has some form of protection in place should any claims arise in the future.

Product liability insurance is a critical component of any company selling up goods. Not only is having the insurance benefits in the event of a lawsuit, but it can also provide peace of mind and protection from any financial ruin should a product fail to perform as expected and leads to damage or injury. The policy will provide coverage for legal costs, settlements, or judgments, as well as medical expenses that may be associated with the use of your product. Depending on your business's size and requirements, you should determine just how much coverage you need in order to make sure that all instances are covered adequately.

If you have any questions about Product Liability Insurance, please feel free to contact me. 

Jason Matison
Commercial Insurance Agent
​Austin, Texas
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