A Brief Guide to Product Liability Insurance for Small Scale Manufacturers As a small scale manufacturer and seller, you need be cautious about lawsuits that can come your way as a result product issues. For protection against such claims filed by buyers and users, you need to buy product liability insurance. Some of the common claims that you may face are discussed below. Manufacturing flaws: The basis of this claim is that a flaw in the production process resulted in the defective product. An example would be the presence of toxic chemicals in your product that made their way during the manufacturing phase. Design flaws: If the design of your product suffers from a defect, thus making it potentially unsafe for use, then you may be inviting a defective design lawsuit. A simple example would be designing and manufacturing a three-legged chair that does not provide adequate support and tips over very easily. If the same chair is a stable one, but if one of its legs is not attached securely and has loose bolts, then the product liability would be discussed in reference to a manufacturing defect. A well-known product defect litigation was that filed against Ford in relation to its Pinto sub-compact’s flawed structural design. This flaw caused the fuel tank to rupture in rear-end accidents, resulting in dangerous fires. Inadequate warning and labelling: You can also face a liability lawsuit if you are negligent in adequately communicating your product’s features and risks. A famous example would be the $2 million lawsuit filed against McDonald's for failing to warn the plaintiff about the brand’s coffee being hot and capable of causing third-degree burns. It is a good idea to engage the services of an insurance broker to identify a suitable product liability insurance policy for your business. In a world where lawsuits have become all too common, it is always better to be safe than sorry. |
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