Does your company manufacture products? If so then you most likely require a Product Liability insurance policy to complement your General Liability Policy.
Product Liability Insurance covers companies against lawsuits claiming third-party bodily injury or property damage caused by a product you manufacture, distribute, or sell. There are three main areas of coverage for product liability insurance; manufacturing defects, design flaws, or improper marketing.
Coverage in the event that the product you sold was improperly assembled, or built incorrectly.
Coverage in the event that the product you sold was built correctly, but the fault lies with the original specifications or design of the product being faulty resulting in it not functioning based on its intended use.
Coverage in the event that the product is marketed as being able to do things it cannot. Typically, the most common types of improper marketing claims are due to improper labeling on a product.
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Product Liability Insurance is required for any business who manufacturers, sells or distributes products, including repairing, repurposing and importing products as well. This includes companies of all sizes, from a small business to a multinational corporation.
In addition to this, if you are selling products from a manufacturer and it goes out of business, or cannot clearly be identified, you could be held liable. In Canada, we see this happen to distributors importing products from unsanctioned countries, where responsibility is difficult to assign to the original manufacturer and therefore the distributor is held responsible as is if they made the product themselves.
Product liability insurance costs vary depending on the following factors:
In most cases, Product Liability insurance will be combined with the purchase of your Commercial General Liability insurance policy. The minimum premium for policies starts at $1,500 and will go up from there.
To get started with product liability insurance, you will need to provide your FCA broker with baseline information via an application and specify whether this is your first Product Liability policy, or you are looking for a quote as an alternative to your existing insurance company providing coverage. The baseline information includes:
Once FCA receives your completed application, we begin the process of obtaining quotes from our network of insurance partners to ensure you receive the coverage you need.
As a business owner, you understand your business better than anyone else and your broker can help guide you to find the limit that works best for your operation. As a starting point, it’s always best to work with contractual requirements you have with customers, landlords or any other related entity to your operation and build up from there. Ultimately, it’s your decision how much liability insurance you need, but understanding basic guidelines can help you make an educated decision on what makes sense to protect your business.
A product liability claim could be triggered from a lawsuit brought against a company claiming third party bodily injury or property damage. This exposure may extend beyond the manufacturer to include distributors and resellers.
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