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Oct 15

Why Product Liability Is So Important In Today’s Business World

For many business owners, liability insurance is something that they are very aware is crucial for their business; but many don’t know that there are different kinds of liabilty policies to choose from, much less which policy is right for their business. While there are actually many to choose from, the primary three are professional indemnity, product liability, and general liability.

Let’s begin with product liability insurance, and even more so, let’s begin with actual product liability. The legal responsibility an entity bears towards a consumer using a product is called product liability. This responsibility is taken into account when a claim is brought by a consumer of physical injury, damage to property, or some other loss, that happened directly as a result of a problem with a product handled by that entity.

A manufacturer’s responsibility lies in the workmanship of the product and in the packaging. If the product is created with inferior work, has defects, was built using inadequate materials, or has individual pieces that don’t function correctly, or if the product isn’t labeled with proper & improper uses, the chances of product liability goes up.

The other businesses involved in releasing a product to the general public are also at risk of having a claim brought against them for product liability. In the US, consumers with a product-related claim are entitled to know about every business on the chain of distribution, and can bring a suit or claim against any of them.

Another interesting note about liability concerning products: the person who brings the claim or suit against a company doesn’t even necessarily have to be the person who bought the product. They don’t even have to be the person who was using the product when damage or injury occurred! If someone is standing or walking nearby and is injured due to a problem with a product, they can sue for damages, even though they didn’t have anything to do with the purchase of the product.

In today’s legal climate, where small claims court is full of civil law suits and persons asking for compensation for damages, it is crucial that businesses who have anything to do with product creation, refurbishing, distribution, packaging, fulfillment, or retailing have product liability insurance in place. One legal claim could realistically put a business under such financial strain that maintaining cash flow, paying employees, or even staying in business, could be an impossibility.

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