Product Liability Insurance

Your customers expect you to have safe and reliable products, and failing to meet these expectations can lead to huge financial losses.

If one of your products harms a customer or other stakeholder in any way, they can sue your business, leading to costly legal fees and settlements that can easily reach six figures. While you may do everything in your power to ensure your products are safe, mishaps can still occur without warning. That’s why, to protect against claims and ensure the longevity of your business, you need product liability insurance.

Claims Scenario: Total Recall

The company: A food manufacturer specializing in the sale and distribution of spices

The challenge: An international distributor of spices became the target of a mass recall after several of their products were contaminated with a peanut protein. Many consumers suffered allergic reactions, which led to claims in multiple jurisdictions.

Companies that import products, including raw ingredients that are later provided to manufacturers of final products, face serious liabilities if the imported product does not meet safety standards. In the case of the peanut allergen, the company caused serious injuries and illness to their customers and did not include required labels, warnings and instructions due to the accidental nature of the contamination.

Product liability insurance in action: In product manufacturing, a variety of things can go wrong throughout the production and distribution process. Product liability insurance provides protection against a variety of unforeseen circumstances.

In the example above, product liability insurance responds directly to the manufacturing and labeling defect, providing coverage for claims related to consumer injury and illness. It should be noted that not all product liability policies help organizations recoup the costs of a full-scale recall. As such, it’s important to review policy language with a qualified insurance broker

Claims Scenario: Washed Up Suppliers

The company: A washing machine manufacturer that purchases key components from third parties

The challenge: Many manufacturers source components for their products, sometimes from multiple vendors. While this can save organizations time and money, it can create serious liability risks in the event of an issue.

Consider a washing machine manufacturer who relied on a third-party supplier that provided hoses and other connection components. In one instance, the supplier delivered hoses that were smaller than what the design specifications called for, which led to malfunctioning appliances, scalding injuries and damaged property.

Product liability insurance in action: While contracts can provide protection and cushion the cost of manufacturing defects caused by third parties, they often won’t protect the primary company if a consumer is injured.

Product liability insurance protects organizations from a variety of liability concerns, even if a defect is caused by an outside supplier. To supplement a contractual risk transfer program, product liability insurance is critical.

If you have any questions about product liability insurance. Metro Insurance is here to help! Contact us today at 800-640-4430.

The information included in this website was collected from sources that are considered reliable including, without limitation, rate information provided by carriers, coverage descriptions from carriers and marketing materials from various sources. This information is provided for educational purposes only. We have not verified nor can we guarantee the accuracy, timeliness or completeness of such information. This website is provided on an "AS-IS" basis. Thus, it is solely your responsibility to verify any information you obtain from this Website before making decisions or incurring costs based on such information. This information is not intended to be exhaustive nor should any discussion or opinions be construed as legal advice or policy coverage. Readers should contact legal counsel or an insurance professional for appropriate advice. Please refer to your policy or talk with your broker for specific coverages and exclusions that are applicable to your situation.