As a product manufacturer or seller in Canada, you are responsible for possible defects in the items or if they cause injuries and illnesses to someone.
Whether you cater goods to private companies or the general public, you need proper business liability insurance if the impacted parties file a lawsuit.
Product liability insurance provides coverage against potential issues arising from the sale of your merchandise.
Understanding Product Liability Coverage
Product liability coverage is a type of business insurance policy that mitigates the losses incurred from selling faulty consumer goods. Your business may face allegations from clients, vendors, customers, companies, and third parties to whom you sell, manufacture, or distribute a product.
Business liability insurance protects you against the legal claims of third-party property damage or bodily injury. For instance, if you sell, distribute, or manufacture skincare products, buyers could claim they sustained skin problems after using those items.
Or, the production process involves dangerous chemicals whose toxic traces are still present in the end product. This fact, combined with your failure to mention sufficiently explanatory warnings, can lead to consumer claims.
Lawsuits usually include:
• Design flaws
• Manufacturing defects
• Marketing errors
• Inadequate safety warnings
• Incorrect labelling of ingredients
What Doesn’t Product Liability Insurance Cover?
Product liability coverage only applies to physical goods; it doesn’t include services. Negligence, misconduct, overpromising, or failure to deliver the outcome as advertised fall under Error and Omissions (E&O) or professional liability insurance.
Furthermore, it doesn’t cover third-party damages (both property and bodily injuries) caused due to factors other than the product you sell. For instance, you need to have general liability insurance to cover damages like slip and fall accidents.
Who Should Have Product Liability Insurance?
Anyone who sells, distributes, or manufactures products, such as food, furniture, tools, fitness equipment, clothing, software, etc., should get product liability insurance.
If you are an owner of a small business, enterprise, home-based store, or you resell online, your business liability insurance will protect you from potential legal claims filed by:
• Customers
• Wholesalers
• Grocery stores
• Material suppliers
• Restaurants
• Publishers
• Software companies and more
If you belong to a distribution chain, vendors, equipment suppliers, distributors, retailers, and manufacturers should also be adequately insured. Consult your insurance broker to know if you should add them to your policy. Likewise, ensure their policies list you as one of the additional insured members to have product liability protection.
Exporting your merchandise outside of Canada may require you to comply with the industry standards of said jurisdictions. For instance, instructions regarding labelling, appropriate warnings, and other necessary information are usually different.
Product Liability Insurance Costs
Your Commercial General Liability policy may not automatically have product liability coverage. You can find it under the “Products Completed Operations Insurance” category of the CGL insurance. Think about working with a professional to get a customized deal to satisfy your specific business insurance needs.
The amount of coverage required depends on factors like the type of product you sell, production volume, and associated risks. In the same way, the premium is based on the coverage limits, business revenue, your claims history, and other things.
A reliable insurance broker can determine the risks and arrive at adequate coverage. Speak to the experts at Beneficial Insurance Solutions today and find affordable business liability insurance packages from top providers in Canada.