Product Liability Insurance is a complex exposure and managing your risk can be a major undertaking even if you have access to all the right resources. Your customers expect you to have safe and reliable products, and failing to meet these expectations can lead to huge financial losses. If one of your products harms a customer or other stakeholder in any way. They can sue your business, leading to costly legal fees and settlements that can easily reach six figures. While you may do everything in your power to ensure your products are safe, mishaps can still occur without warning. That’s why to protect against claims and ensure the longevity of your business, you need product liability insurance.
The challenge: An international distributor of spices became the target of a mass recall after several of their products were contaminated with a peanut protein. Many consumers suffered allergic reactions, which led to claims in multiple jurisdictions. Companies that import products, including raw ingredients that are later provided to manufacturers of final products. Moreover, they can face serious liabilities if the imported product does not meet safety standards. In the case of the peanut allergen, the company caused serious injuries and illness to their customers and did not include required labels, warnings, and instructions due to the accidental nature of the contamination.
In product manufacturing, a variety of things can go wrong throughout the production and distribution process. Product liability insurance provides protection against a variety of unforeseen circumstances. In the example above, product liability insurance responds directly to the manufacturing and labeling defect, providing coverage for claims related to consumer injury and illness. You should know that not all product liability policies help organizations recoup the costs of a full-scale recall. As such, it’s important to review policy language with a qualified insurance broker.