PRODUCT LIABILITY CLAIMS: WHAT YOU NEED TO KNOW

Manufacturers, and sellers of goods at all levels can be held liable for a range of alleged product defects. Product Liability claims can be made based on one, or more, of these alleged defects:

„ Design Defect – a flaw in the design of the product, which makes it dangerous even when manufactured correctly.

„ Manufacturing Defect – a defect caused by something that went wrong in the manufacture of the product. Unlike a design defect, this fault will appear in some products but not the entire product line.

„ Marketing Defect – inadequate or non-existent warnings about a product’s intended use, or incorrect instructions which can lead to the product being used in a dangerous way.

Even with the best intentions and most rigorous testing processes, your business may face a Product Liability claim. This could be due to:

„ A customer using a product in a way you hadn’t considered, resulting in injury.

„ A manufacturing fault impacting a small number of products.

„ A design error that is missed during the testing process and only comes to light after the product has reached customers.

„ A material or chemical used in product manufacture is deemed harmful to health, despite previously being considered safe.

„ Historic claims – a company can still be held liable even if none of the current owners or employees of a business were present during the time an alleged faulty product was manufactured or sold.

What is Product Liability Insurance?

Product Liability Insurance is designed to cover the cost of compensation to anyone who is injured, or whose property is damaged by a faulty product. Associated legal costs will also be covered under a policy, but not the cost of replacing the defective product itself.

It’s important to consider that even if you successfully defend a Product Liability claim, legal representation and court fees throughout the lengthy process can be incredibly costly.

A Product Liability policy will normally only cover damages and legal fees up to the agreed aggregate policy limit. It is therefore important to consider the realistic worst-case scenario when deciding your policy limit.

Speak to an expert

If you are unsure on the level of Product Liability cover you require, are starting out on a new business venture or looking to expand your current business’ activities, get in touch. We take the time to understand the unique risk factors for every client and can advise the best cover to protect your business.