Wondering what the purpose of insurance for businesses is? Because no system is 100% free of accidents or complications, insurance provides you with a preventative cushion to fall back on when unexpected situations occur. Acquiring product liability insurance protects your brand and relieves you of the burden of the risk if something goes wrong. To help you navigate and understand this landscape better, we’ve put together a guide on details you should know about product liability insurance.
What is Product Liability Insurance?
Product liability insurance is a type of insurance that helps cover the costs of compensation and liability claims in the event a consumer is injured or harmed by your product. In other words, it helps to protect a company from serious financial damage. Like other forms of insurance, product liability insurance can be purchased through an insurance firm that specializes in businesses and commercial insurances. It can either be purchased as a standalone policy or as a part of a general liability insurance policy, which includes coverage for medical expenses and supplemental payments.
Although product liability insurance isn’t necessarily required by law, it is highly recommended to protect any brand from unforeseen impacts that its products could have on certain individuals. Accidents can happen and without proper insurance, the issue can escalate quickly and result in a direct lawsuit that can cost the entire business. Not only does product liability insurance protect your brand, employees, customers, and assets but it also allows your brand to continue to deliver and succeed. As a company, acquiring product liability insurance shows a willingness to do the right thing on the chance an issue does arise.
Why You Should Have Product Liability Insurance
Product liability insurance fundamentally acts as protection for your company. As such, all businesses need product liability insurance — whether you are a small business, large business, manufacturer, retailer, or wholesaler. Issues can come up at any stage of your production line and cannot be fully controlled. Because of this, it is a smart decision for your business to obtain product liability insurance, regardless of the types of products you sell. Keep in mind that whether you sell your products via online forums or at brick and mortar stores, you may need to provide evidence of product liability insurance to those parties carrying your product.
Additionally, product liability insurance, depending on the policy you select, can cover a variety of product liability claims related to design defects, manufacturing defects, strict liability, and improper warnings. Each of these claims holds the potential for large fines and penalties. Without product liability insurance, your business would be unprotected in the event that a lawsuit arises from one of the products that your brand sells. Remember, failure to acquire insurance will leave your business vulnerable and may even completely shut down your operations due to the associated costs. That’s why, as a dietary supplement business or manufacturer, acquiring this insurance protects the company against unforeseen product issues or events.
Key Benefits of Product Liability Insurance
Now that we’ve established why this type of insurance is recommended, let’s take a look at the main benefits that it offers. There are many benefits that product liability insurance can provide for your business. Of these benefits, the most important is that it helps cover the consumer’s medical costs, legal fees and costs, and settlements made against your brand in the event that there is a lawsuit.
- Consumers’ medical bills: If a consumer is injured as a result of your product, this type of insurance can help cover his/her medical costs to treat his/her injury. This not only increases the chances that the client will recover properly but also leaves a positive image of the brand and can save you the lengthy bills that such a process usually undertakes.
- Legal fees and costs: This type of insurance covers the legal fees and costs of defending your business from lawsuits or claims. This means that from the moment the process starts until it ends, your legal fees will be covered, depending on your policy.
- Settlements and court-ordered judgments: In the case that a settlement is reached and your business has to compensate the consumers, this insurance can help cover the costs and expenses related to these court-ordered judgments.
As mentioned earlier, fines and penalties can be very costly. Not every business has the resources to cover product liability claims and lawsuits, and few entrepreneurs want to think about how best to protect the downside of a business. Without any help from your insurance plan, your business is at a higher risk and may incur large financial losses.
No matter how your supplement is manufactured and produced, there is always an inherent risk in launching and operating a business. Lawsuits for injury and damage are both complex and expensive. Supplement brands looking to protect their brand and stay ahead of the fray should consider getting product liability insurance to properly cover their bases.
*Disclaimer: Content within this post should not be considered legal advice and is for informational purposes only. Paragon Laboratories is not responsible for any content that you may access from third-party resources that may be accessed through or linked to this post.