Why Manufacturing Companies Need Product Liability Coverage

Product liability coverage

Product liability coverage protects the insured against financial loss due to legal liability incurred by the insured because of an injury or damages caused by the use of the insureds product. Product liability insurance helps cover some of the costs resulting from a lawsuit. It covers the manufacturers liability for losses or injuries to a buyer, user or bystander caused by a product defect or malfunction, and/or a defective design or failure to warn. There are typically three types of claims brought against manufacturers: 1) manufacturing or production flaws; 2) design defect; and/or 3) defective warnings or instructions.

The need for product liability coverage is easier to understand with a better understanding of the potential liability. A claim of manufacturing or production flaws alleges that an unreasonably risky defect in the final product was created during some stage of production. A claim of design defect alleges that the products design is inherently dangerous. A claim of defective warnings or instructions alleges that the product was improperly labeled or that the consumer did not understand the risk due to insufficient warnings.

Businesses need to know how to protect themselves in the event of unforeseen circumstances. Lawsuits resulting from faulty or damaged products can be expensive and time consuming. Product liability coverage provides security.