The Importance Of Product Liability Insurance And Understanding What It Covers

By Author: Publicliabilityinsurance
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Insurance is a critical component that assists any type of business in keeping its finances safe and secure. Insurance, regardless of the size of your business, can provide long-term financial stability by helping you in situations where a client or third party files an insurance claim against your company. Many business owners overlook the numerous benefits of insurance and believe that their company does not require any type of insurance.

Product liability insurance is one such insurance cover that provides a form of financial protection to businesses that sell products to their customers. To new business owners, not purchasing this insurance may appear to be a cost-cutting measure. In reality, product liability provides long-term cost savings while also protecting your company from financial threats that could lead to bankruptcy. Let us take a look at what product liability covers and all the industries that can benefit from product liability insurance.

Product Liability Insurance: Understanding Its Importance

Many businesses ...
... are familiar with public liability insurance, a type of insurance that protects against claims for property damage and personal injury. It is only limited to third-party damage caused by your professional work on an ongoing project. If a business's product causes damage or injury, public liability insurance will not cover it.

Product liability insurance on the other hand, provides comprehensive financial protection in case the installation or supply of one of your products injures a person or causes property damage. It is essential for businesses providing products to their customers because product-related damage can often require you to pay hefty compensation to your clients. This beneficial insurance is also required for companies that assemble products or provide product installation services, in addition to manufacturing businesses. Products can frequently cause harm due to factors such as design flaws, insufficient instructions, and product defects. Because there are so many variables, it is difficult for businesses to avoid product liability claims in all of their projects, making insurance a necessity for protection against such claims. Here's a simple example to help you understand where you might be liable for product damage. Assume you provide equipment installation services and install a new computer system at your client's place of business. Within a few days, the client experiences overheating issues in the system, resulting in damage to other nearby wiring. The client can hold you liable for the damage and demand substantial compensation. Even if the situation arises due to the company supplying the equipment and not due to a fault in installation, you would still be required to go through the legal procedure and hire professionals for assisting you. Thus, product insurance becomes necessary, and it assists you in avoiding financial setbacks to your business.
An insurance cover that protects against product-related damage comes in handy even in the situation where your business is not found liable against a product liability claim. This is because, regardless of whether or not you are liable, you are required to hire a lawyer as soon as a client files a claim against your company. Hiring a lawyer is an expensive task in and of itself, and it is best if the cost is covered by an insurance plan. If you are unsure whether to purchase product liability insurance, you can seek expert advice from insurance companies such as Public Liability Insurance.

Does Your Business Require Product Liability Insurance?

Any business that provides a product-related service can benefit from product liability insurance. You might not be legally required to have a mandatory product liability cover, but you can still leverage this important form of insurance and avoid financial damage to your business. Let us take a look at some major industries that require product liability protection.

Manufacturing Industry

Businesses that manufacture products may provide defective products that cause damage or injury. Insurance compensates your clients and protects your company's reputation.

IT Industry

Defective software installation can also lead to damage to the computer. Thus, IT businesses should also consider product liability insurance.

Healthcare Industry

Any person can suffer an injury due to faulty medical devices and pharmaceuticals, making it necessary to protect your business finances in such situations.

Textile Industry

Faulty textile products may also expose customers to skin irritation and other illnesses as a result of contact with a hazardous substance.

Food Industry

A single incorrectly labeled food or beverage can cause allergic reactions in customers, putting your business at risk and requiring you to compensate for the resulting health damage.

Aside from these industries, any business that engages in wholesaling, distributing, repairing, or installing must also have product and public liability insurance. Public Liability Insurance provides innovative insurance solutions to meet your specific business needs. Regardless of your trade, profession, or business, you can rely on their cost-effective insurance products.