If you’re a business that manufactures, designs or supplies a physical product, then you can be held responsible should your product injure a member of the public or their property. You could find yourself paying millions in damages and legal fees.
A Product Liability policy offers protection against this scenario. In the case of an injury or damage claim being made against you, your product liability policy will cover the cost of legal fee and compensation claims for:
• Death or personal injuries caused by your product;
• Loss of or damage to property caused by your product; and
• Unforeseeable circumstances, such as product faults that your quality control system could not identify.
However, you should not view product liability as an unbreakable safety net. If there was a fault with the product due to bad workmanship or design, the policy will not protect you.
If a product injures someone or damages something, it mainly falls to the manufacturer to take responsibility. However, even if you did not manufacture the product, there are still some circumstances that could see you being held responsible. For example, if the products bare your name and branding, or if the manufacturer has gone out of business or cannot be traced, you will be forced to take responsibility.
In 1997, Owens-Corning Fiberglas Corporation acquired Fibreboard Corporation, a manufacturer who used a great deal of Asbestos, a mineral that is now known to cause lung issues, in former products. By 2000, Owens-Corning filed for Bankruptcy following a massive settlement of 243,000 asbestos-related claims, despite not being the original manufacturer.
Compensation payments can cover anything from lost income due to injury, or repair or replacement of goods in the case of property damage, meaning the cost can be incredibly high. A product liability policy can cover the cost of a claim, whilst ensuring your business can continue to operate.