Why Brands Interested in Retail need Product Liability Insurance

For brands that are interested in getting their products sold into retailers,  product liability insurance a required necessity of doing business with them. Just like a signed vendor agreement and a W9 (or W8-BEN if you are an International Vendor), a Certificate of Insurance (aka Product Liability Insurance) is mandatory paperwork as part of the new vendor set-up process with any mid-size or large US retailer.

Product liability insurance provides protection for your business relating to the manufacturing or sale of products, foods, medicines and other public items. This insurance covers liabilities for losses due to injuries caused by malfunctions or defects or a failure to warn consumers about the dangers of using a product.

The reality is that your retailers as well as their customers expect you to have safe and reliable products, and failing to meet these expectations can lead to devastating financial loss. If one of your products (or even its packaging) harms a customer in any way you can find yourself in a law suit. Loss control measures are vital to mitigating these exposures, but even when you do everything in your power to ensure your products are safe, mishaps can still occur. That’s why, to protect yourself against claims and ensure the longevity of your business, you need product liability insurance.

And what about a product recall? What would happen if you produced a product that was incorrect and it was your fault? Do you have insurance that would take care of all of those expenses? Replacement cost, lost profits, overtime for employees, brand rehabilitation expense; these are all items to consider when starting a business and protecting assets through insurance.

Does my general liability policy include product liability protection?

Generally, there is limited product liability protection under your commercial general liability policy, yet it may not be enough coverage to adequately protect your business. Product liability insurance supplements general liability policies and provides protection against losses caused by malfunctions or defects in your products.

Summary of product liability insurance benefits

  • Provides coverage for manufacturing or production flaws
  • Protects you against design defects
  • Helps organizations prepare for and litigate claims related to inadequate defect warnings or instructions for using the product

Product liability is a complex exposure, and managing your risk can be a major task. Each business has unique exposures so it is recommended to speak with a qualified insurance consultant to ensure your business is properly protected.

This guest blog post was written by Josh Luetkehans, a business insurance consultant with Connor and Gallagher OneSource (CGO). Josh helps companies perform a thorough review of their insurance plan and offers competitive solutions to protect your business and mitigate risks. Josh can be contacted at 630.687.6417 or at jluetkehans@gocgo.com.