What is Product Liability Insurance?

What is Product Liability Insurance?

June 15, 2022 Views: 212
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You sure spent a great deal of time developing your business from the first day of operation to the present. You probably refined your product in more ways than one to give the best customer experience you could offer. But have you considered thinking about what happens after you make your sale?

After your product falls into the hands of your customers, your accountability continues. Get to know more about the meaning of Product liability insurance and its benefits for your business, some examples of when it applies, and the other types of liability insurance that protect you from the costs of third-party claims.

 

What is Product Liability Insurance?

Product liability insurance helps to protect your business from the costs of defending third-party insurance claims and possible compensation costs that arise from any damages or injuries brought by your products. Whether you produce your products, rebrand and sell them or import them from countries outside of Australia, you may be responsible for any accidents that involve the products you sell.

The financial impact of such claims can be hefty, not to mention the negative effects it can bring to your business image. Consulting with a trusted insurance broker can save you tons of money and your reputation from unforeseen incidents.

 

When is Product Liability Insurance used?

When a third party brings a claim against you due to the product that you supplied them, you may be able to use your product liability insurance to cover your costs. Costs may include compensation payable to that third party and also your legal defence costs.

An example of when a claim might arise could be, the bicycle wheelset bought from your shop which had a missing part detached from the bike frame and injured the cyclist who used it. Or perhaps the product you import does not have the required safety warnings and may cause injury or death when used improperly.

 

Do I need Product Liability Insurance?

If you sell products, whether you manufacture them directly, assemble or rebrand them, or make them available by importing, you need to consider product liability insurance to cover your risk. This is also a critical consideration for sole traders who may find themselves personally liable for the products they provide.

 

Are there other types of liability insurance?

Aside from Product Liability Insurance, you may also consider two other kinds of related insurance for your business:

1. Public Liability Insurance

If your business activities deal directly or indirectly with the public, you may need this kind of insurance. This type of coverage protects your business from claims or compensations for injuries or damages caused by negligence while carrying out a service. In some cases it is included in business insurance packages.

 

2. Professional Indemnity 

This type of insurance protects service- and advice-providing professionals and companies and helps pay for defense costs in case negligence claims arise. There are numerous types of professional indemnity insurance.

It is important to take into account the likelihood of unanticipated issues after providing your goods or services to your customers as a business. To minimise any cost or reputation losses talk with an insurance broker today about product liability insurance and get the best protection against after-sale and business activity disputes.

 

General Advice Warning: This advice is general and does not take into account your objectives, financial situation or needs. You should consider whether the advice is appropriate for you and your personal circumstances. Before you make any decision about whether to acquire a certain product, you should obtain and read the relevant product disclosure statement.

ADVISR

Advisr does not provide advice and does not hold a financial service license (AFSL). All information above has been provided by ADVISR.

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