What is Product Liability Insurance?
Businesses that sell products are exposed to potential risks long after their products reach customers’ hands. Should a sold product cause injury or damage, the responsible business may be held financially liable for any expenses that are incurred by the affected party. Product liability insurance helps protect Massachusetts businesses from covered lawsuits that arise from product-related issues.
Product liability insurance policies are highly specialized commercial liability policies. As liability policies, they typically cover legal costs, settlements and judgements associated with covered claims.
What Massachusetts Businesses Need Product Liability Coverage?Most Massachusetts businesses that make, transport or sell products may want product liability coverage. When a product causes substantial harm or damage, the affected party might sue any business in that product’s supply chain. This can include the manufacturer, distributor, transporter, wholesaler, retailer or any other business that handled the product.
What Sorts of Claims Are Covered by Product Liability Policies?
As is true with other types of insurance policies, the protections offered by product liability policies can vary. Generally speaking, however, there are some common issues that many policies offer either standard or optional protection against. Some of these common include coverage for:
- Manufacturing flaws
- Product design issues
- Production defects
- Warning insufficiencies
- Instruction errors
In order to understand exactly what a specific policy covers, businesses should review that policy with an insurance agent who specializes in product liability coverage. A specialized agent will understand the language included in a policy, and they’ll be able to explain in detail what a policy covers and what it excludes.
Do Product Liability Policies Offer Coverage for Products Themselves?Because they’re mainly liability policies, product liability policies typically don’t cover products themselves against damage. For coverage against fire, theft and similar perils that could damage or destroy products, businesses usually need some form of property insurance coverage. An insurance agent who’s familiar with product liability policies can likely also help with insuring products against damage.
Does General Liability Insurance Cover Product Liability Coverage?
Product liability coverage isn’t a staple of all general liability insurance policies, but some of these policies do offer a certain amount of product liability coverage. Those policies that do offer coverage, however, frequently only provide a basic amount of product liability protection.
Before relying on this protection, businesses should review the coverage with a knowledgeable insurance agent who can help determine whether additional product liability coverage is needed. If it is, the agent can help find a product liability policy that’ll provide sufficient protection for product-related issues.
Is Product Liability Coverage Expensive?
Insurance companies consider many factors when setting product liability policies’ premiums, so how much businesses end up paying for coverage can vary. A few of the items that may influence a policy’s premiums include:
- How many products a business handles or sells
- How those products are used
- Who purchases those products
- What those products are made from
- What instructions and warnings are included with the products
- Whether the business has recently filed insurance claims
Despite the variation in cost, premiums are affordable for most businesses. Even when premiums end up being a little higher than what other businesses pay, having coverage is still normally more affordable than facing a major claim without any protection in place. The average cost of a product liability claim is $35,000.