Sometimes, businesses often face legal challenges, that could potentially, impact their profit margins. As a result, purchasing product defect liability insurance, may be the answer to protecting themselves from lawsuits, due to company product defects that caused accidental injury, illness or damage. This particular insurance product, covers manufacturers, middlemen, retailers, wholesalers and distributors, from being sued. Any business, that is involved in the sale of a product to a consumer, is liable for damages, even if their actual role, was simply being an intermediary.
Additionally, improper labeling or lack of specific warnings, that led to consumers misusing the product, structural defects that caused injury, inadequate device descriptions, misleading advertising or sales pitches, unsatisfactory testing or quality assurance standards, are usually the reasons, why companies are held liable. Although, investing time and money into being a responsible, ethical operation, is the right or prudent thing to do, as well as cost effective in the long run and may largely, minimize some of the previously mentioned liability concerns, being covered by a customized product liability insurance policy, is absolutely necessary.
Therefore, researching insurance companies, that have a high claims payout percentage, above average overall reputation, very good industry rating, as well as exemplary customer satisfaction performance, may be something to consider. Furthermore, exclusionary policy clauses or whether these insurance companies operate in countries where your products are being sold and reading the fine print, may be worth exploring. A typical policy can be renewed every year, would require the disclosure of annual sales, merchandise or manufactured goods recall information, data on testing methods and extensive product descriptions.