Here Is A Complete Breakdown Of Product Liability Insurance And Why You Need It In 2021

All business owners should have a certain amount of product liability coverage present in their business plan. Almost all businesses have a business owners policy (BOP) or business liability insurance (BLE). Here is a quick rundown of who exactly may benefit from it:  

Manufacturers

Manufacturers generally invest in product liability coverage. For example, a carbonated drink is accidentally contaminated while in production. In such a case, when this batch of the drinks goes out for sale, customers may get sick, which may result in the company facing multiple lawsuits.

Retailers And Wholesalers

Retailers and wholesalers aren’t directly responsible for making products, but they can still be held responsible for any ill effects caused by anything they sell. For example, if a retail store accidentally promotes a sugared beverage as sugar–free, it could lead to diabetic consumers drinking the product and becoming seriously ill. Therefore, it’s crucial for retailers and wholesalers to have product liability insurance for a situation such as this.

Trade People

People who work as general contractors, construction workers, or installation workers may need product liability insurance as well. Say an office wants to set up new lights for the building. If a resulting electrical issue were to cause any physical damage to the property or the office workers, then the light installation company could be held liable for a defective product.  

In case your business doesn’t fit the above-mentioned categories, then you may not require product liability coverage. In general, you may need the coverage for your business if your work:  

Firstly, relies heavily on human labor 
Secondly, could suffer from a recall 
Doesn’t have funds to cover the cost of a lawsuit 
Has difficulty managing the distribution of your product 
Lastly, cannot provide industry-standard packaging