To get proper protection from claims related to the sale or manufacture of medicines, food, products, or other goods to the public, businesses need to obtain product liability insurance. The purpose of the policy is to cover a failure to warn or a defective design, and more commonly a malfunction or defect of a product that caused injuries to a bystander, user, or buyer. This policy covers the liability for losses for the manufacturer or seller. Sometimes this type of plan is called products-completed operations insurance when it is combined with a commercial general liability policy.
Businesses must understand the potential liability in order to truly understand the need for the coverage. A company may face three types of products claims: Defective Warnings or Instructions; Design Defect; and Manufacturing or Production Flaws. From these types of claims, certain damage awards are given to the victims including lawyer fees, costs, and punitive damages. Further, economic damages, compensatory damages, and medical costs are typically given. Unfortunately, businesses are sometimes put out of business because of product liability claims where the business was not covered.
To learn more about how product liability insurance can protect you, contact Aimpro.