What is Product
Product Liability Insurance is a type of Business Insurance that is designed to
protect professionals or businesses who are supplying, retailing, and distributing products that
are made available to the general public. This insurance could protect the business owners
against financial loss due to bodily injury and property damages claims that the insured defect
product causes to others. While the word “product” has broad and different meanings, Product
Liability Insurance is only limited to tangible personal property products. With this in mind to
better protect your building properties, or your building itself, you must purchase General
Get a Free GL Insurance Quote Here.
Responsible Parties for Product Defects
- The manufacturer of the particular product;
- The manufacturer of the parts that are used to produce the products;
- The party that installs and assembles the product;
- The wholesaler of the items; and
- The retail stores who sell the product to the consumer or the general public.
Different Types of Product Issues or Defects
Product Liability Insurance covers litigation for design defects that can cost small businesses a massive amount of losses. It is acknowledged that design defects are clearly opposed to manufacturing defects. A claim for design defects occurs when there is any foreseeable risk, or the product fails to meet the standard of the general public as a safe product. Thus, if a feasible alternative design could help your product prevent an accident, meaning the product is at-fault.
Manufacturing defects occur if the manufacturing companies are not vigilant enough to foresee the materials that they use on the making of their products. Usually, the cause of manufacturing defects is that the products are made with cheaper materials. If the product is made with cheap materials, the tendency is the item has a poor quality —which could lead to malfunctions and would put the consumers at risk. Product Liability Insurance protects and covers the cost of litigation process and other necessary payments regarding manufacturing defects.
Failure-to-Warn claims arise from products that produce non-visible dangers. Although these dangers can be mitigated —should the manufacturer or the producer of the product warn its users. Some products are dangerous regardless of how delicate it is made as intended for its purpose, but failing to notify the customers of the risk of the product is business negligence. Also, failure to warn includes producing insufficient warnings about the product and failure to indicate significant instructions.
Product Liability Theories
Strict liability claims mainly focus on the manufacturer' s products itself. With this liability claim, the manufacturer of the product will be held liable for the defective products — even though the manufacturer is excluded in the construction process of the item.
When underlying negligence claims were filed against the insured business, the plaintiff must provide proof of:
- The duty owed
- Proof that the duty was breached;
- The breach of duty results in the proximate cause of the plaintiff’s injury and;
- The plaintiff actually suffers in covered quantifiable damages.
Negligence claims often deal with specific scenarios, one of which is negligence per se. With this scenario, the business is automatically liable and negligent —should the product manufacturer violate any of one statute of law —even if no proof of breach of duty is provided.
Consumer protection is a usual procedure that administers particular solutions to consumers who purchase defect products.
In contract laws, warranties are an assurance that is not a condition of contracts, meaning warranty is not a guarantee but merely a promise that concerns the products in business transactions. Usually, claims concerning warranties require a mutual relationship between the harmed party and the seller who enforce the warranty. Meaning, the deal must be mutual for both parties. Thus, breach of warranty occurs if the promise is not executed in accordance with its contracts.
There are three types of product liability claims that specifically focus on breach of warranty, including breach of an express warranty, implied warranty, and breach of an implied warranty for specific purposes.
Express warranties are developed when the marketer of the product makes a promise to its buyer that the product they offer has particular qualities. Also, an express warranty is made when the seller creates statements with regards to the product, and the statement plays a role in the decision of the buyer to purchase the product. Thus if the purchaser feels that the statement about the product is false and a misrepresentation —the buyer can file a claim due to breach of express warranty.
Generally, implied warranties are unwritten promises that stem from the transaction and from the mere understanding of the purchaser, rather than from the representations and statements of the seller.
The implied warranty of merchantability necessitates that the products must meet a standard quality or the product must meet its purposes as its intended use.
This warranty is breached if, for example, a buyer asks for a high-speed computer that he can use for the purpose of playing online games. However, the seller provides the buyer with a pc that is not intended for gaming purposes. In conclusion, warranty of fitness for particular purposes arises when a buyer of particular products relies on the seller's selected products to suit the customer's demand or request.