Who needs business product liability insurance?


Business product liability insurance is for those business owners who are exposed to the risk of being sued for any defects in the products they sell, manufacture or distribute, which cause injury to their users.

So if your business involves any of the above-mentioned services, you will be better off purchasing business product liability insurance to protect yourself against the potentially devastating effects of a product liability lawsuit.

When to Buy Business Product Liability Insurance

If your business is involved in the manufacturing, design, selling or distribution of anything that qualifies as a product, whether it be commodities, real estate, or intangibles such as gas, you are subject to the law of strict liability.

That means that if the product is found to be defective and any loss is directly caused to others as a result of the flaw, you are subject to strict liability regardless of the fact you might have taken all the necessary safety measures. Having adequate business product liability insurance in the event of this happening may be vital for the future of your business.

When Business Product Liability is Imposed

Depending on the state and its specific product liability laws, business product liability may arise from negligence, strict liability or breach of warranty. A business owner is usually liable by default for the very fact their business activities involve manufacturing, selling or distributing faulty or defective products. In order for business product liability to be imposed, though, the following three things need to be proven in court:

  • The product's defectiveness needs to be established;
  • Evidence of loss has to be provided;
  • The claimant has to prove that the product's faultiness is the proximate cause of the injuries.

Possible Causes of Business Product Liability

Usually, products can have three types of flaws: design defects, manufacturing defects and marketing defects. In the case of manufacturing defects, only certain items are defective. Design defects are more serious since they appear prior to the product manufacturing, therefore all the items are faulty by design.

Lastly, marketing flaws have to do with the failure to provide the necessary safety and user instructions.

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