What is Product Liability Insurance?

Product Liability insurance protects a company against the financial loss which may be incurred by the manufacturer, merchant or distributor due to injury or damage from using the product. For example if a person gets an electric shock from a brand new toaster the company who manufactured the product can be liable and the injured party can make a claim for the damage occurred.

Who needs Product Liability insurance?

If your business supplies products to the general public then your business needs Product Liability insurance and needs to make sure the products are safe for the consumer. Even the shop who sells the product needs insurance and to do all they can to ensure the product is safe as they too are responsible, however the manufacturer who makes the product is mostly accountable.

How much does Product Liability insurance cost and how much insurance do I need?

The cost of the product liability insurance will depend on the product, the degree of risk, and the turnover and number of employees of the company. How do they calculate the premium? The company starts off the with the base rate and then the figure is changed depending on the individuals details for example if you have made a claim in the past, if you have made significant effort to reduce risks, and so on. If your product has high risk for injury then the insurance of it will be higher such as fireworks, childrens and baby toys, hair and skin products, and cleaning products.

As a consumer be more aware of what you buy – don’t rely on the companies Product Liability insurance

As a consumer you can start managing potential liability by paying close attention to the products that you use, for example giving a toy to a baby. The toy may claim to be safe for its age group however you can inspect the toy yourself and ensure no bits or parts of the toy are loose which the child may swallow or hurt themselves on. Only buy products from well known brands or manufacturers so you know where it is coming from, and never buy products that are exceptionally lower than the other brands, buy it a price and from a company that you feel comfortable with – its better to be safe than sorry.

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