If you’re a small business owner who designs, manufactures or sells a product, there’s a sobering reality that you need to face: The odds are very high that you will get sued sooner or later.
Why? Because product liability laws create legal pitfalls for anyone in the chain of distribution of consumer goods. No matter what your connection to a defective or dangerous product, you can end up being sued if someone gets hurt.
Since no business wants to be exposed to any more liability than it already experiences, product liability insurance is designed to help you manage your risks. It can protect your company against claims related to:
- Bad designs that leave a product unreasonably dangerous during intended use
- Faulty manufacturing that involves things like substandard or dangerous materials used in an otherwise well-designed item
- Labeling errors, such as when a product label doesn’t adequately warn consumers of the potential dangers of using the product
- Marketing errors, such as when an edible product is described as “nut free” but contains small amounts of peanut oil
It’s also possible to protect yourself retroactively through a “claims made” product liability policy — which can be particularly important if you are buying into or taking over an existing business. You simply have no way of knowing whether there are potential lawsuits waiting in the wings until closer to the statute of limitations to file a lawsuit.
So, do you need the insurance? It definitely would be wise to consider it. Consulting with an experienced business attorney can also help you better know your company’s needs. Coping with a product liability lawsuit can be a frustrating experience for any business owner. The more you insulate yourself from potential harm, the easier it is to keep your focus on your business.