Product Liability Insurance: Ensuring Protection

Product liability insurance is one way of manufacturers and sellers use to protect their financial assets against the damages caused by their products. By protecting financial assets, it means that manufacturers and sellers need not shell out their hard earned cash in case there is a lawsuit directed to their distributor or merchant that sold their product. It would be the task of the insurance to handle the payment of any amount awarded by the courts thus it saves the company from a heavy financial loss. It is an imperative that a company should have a product liability insurance if it is involve with manufacturing.

Manufacturing companies, distribution outlets and sellers obtain product liability insurance because of the three things that cause lawsuits.

People claim that there are flaws in production or manufacturing of a product. During the production process there is already a defect. An example of defective ingredients or components being added is when lead paint is used to paint dolls, and melamine or milk.

Product liability insurance also protects the business against lawsuits due to defects in design. Due to the design of certain products, it causes injury or accidents, hence it is deemed unsafe. An example of which is the total recall of Toyota Priuses and other models when they found out that there is a problem with the brakes causing accidents because the cars failed to stop.

Product liability insurance is a necessity especially when there are defective instructions and labels. When the labels and the directions lack certain instructions, then it is a cause for a lawsuit. A favorite example of which is the cigarette label. There were no warning signs regarding smoking being hazardous to one’s health or nicotine is addictive, that is why there are major lawsuits against tobacco firms.

Any contingencies may arise and it is important that one should be prepared to meet it head on, and by being prepared, it means acquiring a product liability insurance.

Article source: http://myincurancetips.com/incurance/liability-insurance/product-liability-insurance-ensuring-protection/