Streetsmart insurance Blog
Most business insurance policies are tailored to the needs of service providers, with plenty of coverage for professional negligence, mistakes, and poor industry practices. On the other hand, product liability insurance is designed to protect manufacturers, wholesalers, and retail business from lawsuits that filed because of their defective products.
Like service providers, product providers are held to a high standard of professional integrity. Manufacturers, wholesalers, and retail business are responsible for the quality and safety of the products they sell. When mistakes happen, those business are forced to reimburse their customers and recall any products that could cause irreparable harm.
If you manufacture or sell products in the United States, your customers can sue you if those products cause injuries or property damage. Your general liability insurance policy will protect you from lawsuits that arise due to service provided in the course of selling a product. Product liability insurance kicks in when injuries or property damage are caused by a manufacturing defect.
For example, imagine that Barbara Baker opened Baker’s Cafe in New Jersey. Barbara enjoyed serving baked goods and espresso drinks that were made to order for her customers. One day, Barbara made an espresso drink for a customer and forgot to check the temperature of the drink before she served it. The drink was far too hot, and Barbara spilled some of it on her customer’s arm when it was served. The customer was rushed to the hospital with second degree burns, and eventually sued Barbara for negligence.
In this case, Barbara was responsible for the product and the service that the customer received. Barbara’s general liability insurance policy would pay for any legal fees and damages that were awarded due to her service mistake.
If Barbara Baker owned Baker’s Toy Emporium instead of Baker’s Café, she would not be responsible for making the toys on site. Her toy store would contain products that were manufactured in different countries, and as the owner she would be responsible for picking toys that met the industry’s quality and safety standards.
If a family purchased a video game that had a defective battery, Barbara would responsible for any injuries or property damage that the broken toy caused. Barbara’s product liability insurance policy would pay for her legal fees and any damages that were awarded because of the faulty product.
Street Smart Insurance is committed to providing affordable coverage. Whether you are looking for your first business insurance policy or you are shopping for a better price, our agents are ready to help. Call us at 732-462-8343 for a free quote!