Owning a small business can be overwhelming to say the least. You have so much to do and so much to keep track of. The good news is there are resources available to you to make sure you have everything squared away and ready to go. One resource is an insurance agent. As a small business owner, you can glean a lot of good information from your agent to discover what type of coverage you need most. If you manufacture or sell a product, it is important you discuss product liability with your agent.
What Is Product Liability?
Product liability insurance is for large and small company owners who are in the business of making or selling products to consumers. It refers to these companies being held responsible for allowing customers to get their hands on a faulty product. In some cases, the product might be dangerous for certain individuals and does not contain the proper warning. In other cases, it might just be defective and you did not know it before putting it on the shelf. No matter the way it became faulty, or whether you knew it or not, you hold the responsibility if someone is injured or becomes sick due to your product. Parties who might be a part of such a lawsuit include:
- Parts manufacturers
- Product manufacturers
How a Product Becomes Faulty
There are many ways in which a product could become faulty. Some common situations include a defective design, defective marketing or defective manufacturing.
- Design – A faulty design, or a defective design, is one that comes about from the intentional design of the product. For example, a toy gun that shoots darts too hard is intentionally dangerous because it can obviously hurt someone who gets hit. A toy gun that shoots nothing at all, however, would not be considered intentionally dangerous since it doesn’t have anything that flies out of the barrel. The designer of a defectively designed product may meet stricter liability if the claimant can show that there was another way, similar in cost, to design the product safely.
- Marketing – Mislabeling, failure to provide instructions or the absence of specific warnings about the product would be considered defective marketing. For example, if a foam-dart-shooting toy gun comes without a warning about the dangers of shooting it at someone’s face, and a child injures another, the family would have cause to sue for defective marketing.
- Manufacturing – There is a lot that can go wrong during manufacturing. Whether the parts are not produced properly or the product doesn’t quite come together in the end, defective manufacturing is a big problem. For example, the toy gun might have a small space on the trigger that catches little fingers and results in an injury. This scenario would allow an individual to claim defective manufacturing.
Your Responsibility With Product Liability
As a small business owner, your very first responsibility in regards to product liability is to prevent problems from happening in the first place. Be sure you have procedures and business practices in place to ensure your products are safe for consumers. Conduct quality checks on the products, buy from trusted suppliers and inspect parts before manufacturing anything.
Of course, you can’t prevent mistakes from happening, no matter how hard you try. That is why you have the option of product liability insurance. Purchasing this type of policy will not only provide you with financial stability in an unfortunate situation, but also can help you achieve more peace of mind while running your business. As a part of putting policies and procedures in place within your business, you also have the responsibility of speaking with an insurance agent to secure the right type of coverage for your company, employees and yourself.
The content on our website is only meant to provide general information and is not legal advice. We make our best efforts to make sure the information is accurate, but we cannot guarantee it. Do not rely on the content as legal advice. For assistance with legal problems or for a legal inquiry please contact you attorney.