Why Smart Businesses Carry Product Liability Insurance
In 1963, there was a famous California case in product liability that changed the landscape on who needed to buy product liability insurance.
‘Greenman vs.Yuba Power Products, Inc.’ involved a person who was injured while using a power tool with a spinning lathe attachment. A piece of wood spun out of the attachment and caused an injury. Almost 11 months after being injured, the gentleman sued the manufacturer and the store that sold the power tool unit. This plaintiff won his lawsuit and the store was held responsible for damages along with the manufacturer.
Today, we have what is known as a strict liability standard that is expressed in ‘Restatement of Torts §402A’, a statute rule that every state has adopted. Product liability is addressed to all who helped the injuries to be caused through manufacturing, distributing, advertising, and sales. Product liability insurance is needed by every size of business that fits into any one of these categories.
When the strict liability rules read that sellers are generally liable for physical injuries, it is time for all smart sellers to drop what they are doing and race into the insurance agent’s office to buy as much product liability insurance as the pocketbook will bear. Even if a judge lets a seller off of the hook over a bad product coming out of their store, there is still the cost of defending your good name in court until that ruling is in.
Product liability insurance is sold attached to other policies, or as a stand-alone policy that can be tailored to meet all unique circumstances and budgets. People in the manufacturing industry must choose a policy that protects them from both employee claims and claims from the general public. The size of the coverage needed on a product liability insurance policy depends upon the type of manufacturing involved.
Many people are convinced that children’s products are the largest concern area to hold product liability insurance for. When lawsuits happen over injuries, the jury that is chosen from around the community will often sympathize with a child getting hurt and award damages that are higher than in some other areas. This does not always hold true, but it is something to consider. Product liability insurance often covers jury decisions.
For a product to be safe from the necessity of product liability insurance today, it must be designed without a flaw, put together properly at the factory, packaged so that damages cannot result, and have a listing of all possible hazards attached to the item in some manner so that the public is fully informed about harms that can happen while the product is in use. Smart businesses always carry product liability insurance.
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