If your company makes or sells products ( as a dealer or retailer ) You are responsible for any injury or death allegedly caused by your product. There have been many cases of serious product liability in history:
In 2082, Johnson and Johnson spent over $ 100 million to restore their market share and reputation after seven people allegedly died of cyanide poisoning after taking cyanide. contaminated Tylenol pain reliever capsules manufactured by the company.
In 2000, Firestone filed thousands of deaths and injuries due to defective tires for the company. The company had to recall and replace millions of tires.
In 2009, the American Peanut Corporation filed numerous lawsuits related to the manufacture and shipment of contaminated peanut products. Nine people have died and 677 became sick from ingesting the contaminated product. Although the company is now bankrupt, new lawsuits are pending.
In 2011, eating contaminated melons from the Jensen farm in Colorado, USA, killed 32 people and killed hundreds of diseases. Affected parties have filed several lawsuits against the farm, its trader, food inspector and its main customers. The lawsuits are valued at hundreds of millions of dollars. Jensen has filed for bankruptcy.
Defective products and product contamination problems are a problem for all types of businesses. Every year there are millions of cases of illness caused by the adverse effects food has on consumers. This explains why millions or claims are made against manufacturing companies and their dealers every year.
If you own a company that manufactures or sells consumer goods, there is a risk of product liability. You may have taken the best possible steps to ensure that the products you make or sell are of high quality and free from defects or contamination. However, sometimes this can go wrong and cause serious problems for your business.
If a product your company makes or sells is believed to have caused death or illness, you will lose large sums of money to repair damage and your reputation as a business will be damaged. It might not even be your company’s fault, but you might still be liable for the damage caused.
How can you protect your company from this disaster? ? There is only one answer: Product liability insurance
Product liability insurance protects companies from claims related to the manufacture or sale of food, groceries, medicines or other consumer goods. It covers the liability of manufacturers or sellers for damage or injury to the buyer, user or consumer caused by defects, malfunctions or contamination of the product. Now that we’ve discussed the importance of product liability insurance, let’s look at the cost.
What does product liability insurance cost?
The cost of product liability insurance depends on the products you make or sell, the volume of sales, where your organization fits into the chain or retail, geographic location, etc. However, on average, product liability insurance is about 25 cents per $ 100 at retail.
So if you make or sell low risk products like yarn, dolls, or children’s toys, your liability insurance costs will be much lower than average. However, if you have dangerous items such as guns, knives, fireworks, etc., or products that can cause serious health problems such as cars and electronic equipment, you will pay higher insurance costs and may even be denied coverage.
Even if you pay a high premium, purchasing product liability insurance can still be worthwhile. If you can afford to protect your business from suddenly leaving, why do not you do it ? If many of the companies that went bankrupt due to product liability issues were insured, they might have continued to operate by then.
A smarter alternative is to take out liability insurance for your company. This type of policy, when purchased from a reputable insurance company, can act as a first line of defense against product liability claims. General liability insurance covers, among other things, losses related to property damage, injuries or illness caused by the company’s products or operations. It thus combines product liability insurance with other benefits.
Most general liability insurance covers up to $ 1 million. USA for any loss and up to USD 2 million. USA for all losses incurred in a year. This coverage should be enough for your business, but it may not provide enough coverage if too many people get sick or die after eating or using your product. You can expand your coverage to avoid this problem.