Businesses from all industries should think realistically about the prospect of being sued, as it is becoming more common in the modern world. Having product liability insurance is one way to protect the business from claims which relate to the sale or manufacture of products to the public (such as food, medicines or other consumables).
Having insurance like this will cover the business liability should a buyer or bystander suffer losses or injuries based on product malfunction or based on a product defect. One such example is when a product is defective but the manufacturer fails to alert buyers. In such cases, the manufacturer and the seller will be liable for the effects. There have been some famous cases in past decades when automobile manufacturers faced a slew of claims due to the safety issues with the vehicle.
Many resellers do not take out coverage as they assume they cannot be held liable, but this is not the case. Anyone selling a product, retailing, and those “middlemen” can be brought into a lawsuit if it brought by a customer. Simply claiming that they are not at fault, as they did not manufacturer of the product, will not get them out of legal troubles.
There is a term known as “stream of commerce” liability, which means that any individual or business involved in the placement of the product on the market can be held liable for any damages which befall the customer or end user of the product.
Companies who provide products to the public need to have product liability insurance. There are sometimes cases when this coverage is present in general business insurance, but this is not always the case. As such, companies should speak to their insurance companies to check for complete coverage. This is the reason that having a good working relationship with an insurance professional is essential in business.
When looking for premiums to cover the business, there are many aspects and facets involved. The premium will be based on the type of the product sold by the business, as well as the role played by the insurer in the entire business process. Besides this, the volume of sales will be a factor as this has a major impact on the likelihood of claims from the end users.
Businesses should never try to cut corners when taking out insurance, or give false figures, as this will simply backfire and void the entire premium. It is vital that companies do not under-report the volume of sales or only report a small number.
Likewise, it is very important that the actual products being sold are correctly categorized and insured under the correct headings. Different products come with a greater premium because of the higher risk involved and the potential for damages being claimed.
Having this form of insurance is vital for businesses to stay afloat and deal with any claims that are brought by the general public. Failure to identify the correct premium can be very costly.