Product liability insurance

Product Liability insurance by Aon
If you provide products to your customers, it’s important to protect your business against claims of damage or injury that may arise from these products. Product liability insurance is often included in our industry-specific business insurance packages.

These packages are tailored to meet the unique requirements of your business. As well as product liability insurance, for complete coverage you may also include public liability insurance and professional indemnity insurance cover.

What is Product Liability Insurance?

Product liability insurance, also known as general liability is usually included as part of a public liability insurance policy. It is designed for professionals who supply products to their customers or to members of the public.

Product liability insurance protects against claims of personal injury or property damage caused by products sold or supplied through your business. It is designed to help protect your business by ensuring that if this happens, you don’t have to pay any legal or court costs.

Do I need Product Liability Insurance?

Product liability insurance is recommended for any business that supplies products. Even with products that appear entirely safe, there’s always the potential for something to go wrong – and accidents do happen. Claims of personal injury or property damage arising from product use (or product failure) can be incredibly expensive, and even if you’re not at fault, you may still incur considerable legal costs while defending yourself.

Product liability insurance safeguards your business by providing cover against such claims, including legal defence costs. So you can confidently go about your work, knowing that your protected if something goes wrong.

Cover all the essentials*

It’s important to choose a product liability insurance policy that protects your business in case you supply a product that malfunctions, fails or causes harm.

With our product liability insurance products, you can be confident that you’re protected against a wide range of scenarios, such as:

• Damage caused by software that you supply
• Injury caused by equipment that you supply
• Illness caused by food, beverages or vitamins that you supply
As a business owner, you’re responsible for every product you make and sell. If one of those products is faulty, or causes some sort of injury, your business could be held accountable for the consequences that follow. Product liability insurance can help mitigate the losses from these types of situations.

What is liability?
When it comes to small businesses, liability refers to your company being responsible for damages to a 3rd party in the eyes of the law. Whether you’re a startup trying to get off the ground, or an established entrepreneur with years of experience—you’re exposed to a variety of liability risks. In some instances, your business may not do anything wrong and you could still find yourself tangled up in a lawsuit. Having proper and adequate insurance coverage for your business and its products can help mitigate the losses you experience from liability claims.

What is product liability?
Product liability refers to situations where a customer purchases a product, and an issue with the product causes a bodily injury or property damage to a 3rd party. Business owners can be found responsible for the damages if the source of the issue can be traced back to the small business. Some of the common issues customers encounter that result in product liability claims include:

Products that cause bodily injury to the customer
Products that cause property damage
Sickness caused by food or beverages
There are many different things that can cause a product issue, but 3 of the common reasons are:

Design defect: This issue will be present in a product before it’s even made. It suggests that the design of the product is unsafe or faulty.
Manufacturing defect: This issue suggests that something went wrong while the product was being made. Perhaps it was assembled wrong, or missing an important piece.
Marketing defect: This type of issue has nothing to do with the product itself, but rather how it was marketed to the customer. Incorrect labelling, incorrect safety warnings (or lack thereof) or insufficient instructions are common marketing defects.

The right product liability policy will help protect your business from legal costs if you’re found responsible for a product causing bodily injury or property damage to a 3rd party.

Do you need product liability insurance?
There’s a common misconception amongst some small business owners that they don’t need insurance, or that it’s too expensive. The truth is, whether you’re a baker selling delicious cupcakes, or a boutique selling the trendiest clothes—you should always protect yourself from the risk of product liability claims. The minute you start selling your product you’re at risk for product liability lawsuits, which can be very expensive and time consuming.
Other coverage options to consider:
Commercial general liability insurance: Commercial general liability (CGL) insurance is designed to protect you and your business from a loss if you’re found legally liable for bodily injuries or property damage to a third party caused by the product you sell or the service you provide. CGL insurance can also offer protection in situations where you or your employees are conducting business offsite.

Cyber risk and data breach coverage: Cyber attacks are an ongoing threat to small businesses and have continued to rise recently. Cyber event expense coverage is designed to help small businesses that rely on technology mitigate some of the expenses that may incur as a result of a cyber hack.

Professional Liability: If one of your clients or customers claims your advice caused them a financial loss, your professional liability coverage can help you recover from the financial consequences that may incur. This coverage is also known as errors and omissions (E&O) coverage.

Property insurance: As a small business owner, you likely rely on your property, tools, equipment and technology to help keep your business running. If one of those key pieces of the puzzle was damaged and needed repair, you may not be able to continue operations. This is when you need property insurance coverage.

Equipment breakdown insurance: Your equipment is covered in your property insurance policy for damage caused by external sources, such as fire, floods and weather damage; however, you may not be covered for electrical or mechanical damage. In these situations, you’d look to your equipment breakdown insurance.

Commercial auto insurance: If you or your employees use your vehicle for business purposes you need commercial auto insurance to protect that vehicle in ways your personal auto policy may not be able to.