Who Needs Product Liability Insurance
In product liability insurance terms, a product is any physical item that is sold or given away.
Products must be "fit for purpose". Under the Article 2 of Uniform Commercial Code
§ 2-314. Implied Warranty: Merchantability; Usage of Trade. The body of law that allows one to be compensated in the event that someone's carelessness, recklessness or intentional misconduct injures or damages you or your personal belongings. There are three main classes of torts: intentional torts; negligent torts; and strict liability torts.
§ 2-315. Implied Warranty: Fitness for Particular Purpose.
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your business' name is on the product - i.e. the manufacturer made it for your brand
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your business repairs, refurbishes or changes the product
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you imported it from outside the United States
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you cannot clearly identify the manufacturer
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the manufacturer has gone out of business
Otherwise, the manufacturer is liable - or the processor, where the product involves parts from multiple manufacturers.
However, you must also:
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show that the products were faulty when supplied to you
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show that you gave consumers adequate safety instructions and warnings about misuse
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show that you included terms for return of faulty goods to the manufacturer or processor in any sales contract you issued to the consumer
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make sure that your supply contract with the manufacturer or processor covers product safety, quality control and product returns
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have good quality control and record-keeping systems
The nature of risk, i.e. the viability of a claim and the premium, is affected by:
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who the product is sold to
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how and where it is used
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any warnings or labels provided
Product Liability Insurance Coverage
Depending on the insurance company Product Liability Insurance policy includes following coverage:
Physical injury to the person of a Third Party. This includes sickness, disease, pain and suffering, emotional distress, loss of income and even death.
Damage or destruction including loss of use of a Third Party's property. Reduction in value is the measure of Property Damage.
This coverage reimburses the insured and others up to a certain limit for medical or funeral expenses as a result of bodily injury or death by accident
Limited coverage for damage to a premise caused by a fire for which you may be held liable.