PRODUCT LIABILITY INSURANCE

admin | Food & Beverages | 08 Apr 2022 02:09:30
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Product Liability Insurance…

Product liability insurance protects businesses against claims by third parties. It relates to personal injury or health issues caused by the product. Thus far, it may relate to certain property damages caused by by-products. So, product liability insurance helps to assist you against any third-party claims. The intent is that it will cover any compensation payable to a third party. It includes covering your defence costs too.

Common policy definition

A common policy definition for the word ‘product’ includes anything you manufacture, import, distribute or sell. Thus far, in Australia, if you manufacture, import, and distribute to the public then you are responsible to ensure those products are safe. It must comply with Australian Standards. Hence, Australian Consumer Law (ACL) sets out that you must meet statutory requirements.

So, if the products you manufacture or sell have any defect whatsoever or cause personal injuries the person or family can seek compensation. It may include sickness and in extreme cases death. Hence it may include third-party property damages too. Despite the fact your business may not physically manufacture the products, it may be deemed to be the manufacturer. It includes if your business imports use its brand on the product, assembles, and holds itself as the manufacturer to the public.

Product insurance needs

Claims arising from any unfortunate incident can be expensive. Thus far, without product liability insurance you may be in a lot of trouble. So, if you operate as a sole trader, you potentially expose yourself to personal liability for such claims. It means a product liability claim could seriously affect your personal assets. Therefore, product liability insurance is a prudent consideration for any business that sells or distributes products in Australia. Thus far, even the highest focus on safety may have the potential for something to go wrong. It may be a fault in the manufacturing, processing, or packing of a product. For example, a foreign object in the product causes personal injury or illness.

Furthermore, it may be defective warnings, labeling, or instructions of the product. In fact, incidents like clothing manufacturers using dye may contain a hazardous chemical that may cause sickness. Another example may be a machine that is sold without proper instructions for use. It may not include instructions about the dangers of using it incorrectly. Mistakes happen. Hence product liability insurance covers more than a faulty product.  

What it doesn’t cover

Like most insurance products, there are certain cases where it may not cover your business. Thus far, there are common exclusions in a product liability insurance policy. These are any deceptions about your product before you may arrange insurance. It may be that you lie about certain elements of the product to the insurer. Hence, you may be in breach of your policy. There may be undocumented changes in the design of your product. For example, you may make significant changes to your product. If you do so, you must notify your insurance provider. Otherwise, your policy may be void.

You or your employee may have given bad advice regarding the product. So, this may include safe ways to use the product. Hence, if the advice relates to misusing the product, it may not cover consequent damages. However, your insurance policy may cover costs associated with recalling your product. It may be an optional extra. So, discuss this with your service provider.

By law, product liability insurance is not compulsory. However, that is not a qualification that you should not consider taking out such a policy. It helps to ensure your business. Product liability insurance surely helps protect your business from legal actions. Legal expenses quickly add up if there is a claim against your business. Thus far, if you own a business, you may be liable for damages or injuries to another person or property

Public liability insurance

The two insurances go hand in hand. Public liability and product liability insurances are often stand-alone. However, sometimes product insurance is included as part of public liability insurance. They cover different things. Public liability insurance covers a business when they fail in its duty of care to the public. Whereas, product liability insurance covers companies when their product causes harm or damage to a third party.

To help explain better consider a person who sells homemade soaps and does not include an ingredient in the product label. For example, a customer is allergic to that ingredient and ends up in a hospital. Say, the manufacturer has product liability insurance, so insurance covers legal fees and any compensation that may result from the claim against the business.

So, to describe public liability insurance, a person opens a retail outlet to sell soap. However, fails to properly secure the display shelving. Say, the shelving collapses and injures a customer. If the customer decides to make a claim the public liability insurance may cover it.

 

 

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