Protect your business from product lawsuits
- Product liability insurance protects your company from injuries or property damage caused by your products.
- It covers legal fees and judgments.
- Claims can be related to design or manufacturing defects, strict liability, and improper warnings or instructions.
If you’re a business owner in the Sunshine State, having product liability insurance is essential, whether you manufacture, sell, or distribute products to other businesses (B2B) or direct to consumers (B2C). Product liability insurance protects your company if your products unknowingly cause damage or injury.
Let’s talk about product liability insurance in Florida: What it’s for, what it covers, whether you need it, and how much coverage you need.
Defining product liability insurance
Product liability insurance covers damages caused by products you sell, manufacture, or distribute. This can include property damage, physical injuries, and deaths. The policy also covers legal fees and any judgments against you stemming from lawsuits.
A product can be nearly anything, such as items in a store, toys, electronics, tools, cars/car parts/tires, medical products, furniture or appliances you install in someone’s home, or computer software/hardware.
Product liability claims can be related to:
- Design defects.
- Manufacturing defects.
- Strict liability (a customer gets hurt by a product, even if a business owner isn’t found negligent).
- An improper warning label or instructions on the safe use of a product.
It’s important to note that product liability insurance does not cover product recalls. You would need a separate policy or endorsement to cover those costs.
Product liability lawsuits fall into several common categories:
- Defective products
- Defective software/hardware
- Warranty defects
- Asbestos exposure
- Medical device malfunction
- Defective drugs
- Transportation injuries
Product liability lawsuits can involve multiple entities related to the manufacturing and distribution process, including the company that assembled the product, companies that made the individual parts, and local suppliers that sold the product to a business or consumer.
Who needs product liability coverage?
Any business that manufactures, distributes, or sells products B2C or B2B should carry product liability insurance. It’s not just for large corporations; small companies and startups need protection, too. For instance, if a product you sold caused injuries, anyone involved in the supply chain could be held liable and face a lawsuit.
A customer might also claim you provided insufficient warnings or inaccurate instructions. If they get injured misusing your product, they could blame your company in court later (especially if the person was severely hurt or even killed).
Customers sometimes sue because they are unhappy with a product or experience. Even if a lawsuit seems frivolous or someone is suing you out of spite, you still need to deal with the situation. You still need to pay for a legal defense. A lawsuit can also affect your company’s reputation, which might require crisis PR or marketing campaigns to combat negative press.
Today’s customers are also likely to vent their frustration and anger online in the form of negative reviews, social media posts, blog posts, or message boards.
Industries that commonly face product liability lawsuits
Product liability insurance can protect businesses and industries that often experience lawsuits. How can it help you?
Manufacturers need product liability insurance if they get sued over design defects or manufacturing problems that occurred during assembly. It can also cover products or parts they sell to other companies.
Retailers and wholesalers
Suppose a product you sell to stores or directly to customers ends up causing injuries or property damage. In that case, you could be held liable for damages, even though you weren’t directly responsible for manufacturing the defective product. You can still be held liable for items that were in your possession.
Contractors, construction workers, and installers
Product liability insurance can help with legal costs if you’re involved in an injury or property damage related to work you completed. For example, a homeowner might sue you because the sink you installed leaks, damaging the flooring or walls.
If you’re a general contractor, you need coverage if you need to pay to fix a bad repair job or installation, even if the work can’t be traceable back to you personally (since there might be multiple contractors).
How much does product liability insurance cost?
Although they cover different things, product liability can be included in your general liability policy. The cost of product liability insurance depends on several factors:
- Coverage amount
- Policy limits
- Business size (number of employees)
- Industry and risk factors
- Claims history
The cost of product liability insurance is also based on your annual revenue. For example, a small business in the manufacturing, retail, or wholesale industries with a revenue of less than $1 million would pay about $1,200 per year.
Product liability versus general liability
General liability insurance is something nearly every small business needs. Even though product liability can be included with general liability, they cover different things. General liability covers costs related to injuries or property damage to others, such as slip-and-falls, equipment injuries, contaminated food, as well as faulty products.
What it covers:
- Legal fees
- Medical bills
- Lost wages
- Death benefits
General liability also helps pay for legal fees related to advertising injury lawsuits, such as mistakes on client projects, missed deadlines, copyright infringement, or damage to another company’s reputation.
Florida law and product liability policies
In Florida, someone has four years from the date of an incident to take legal action for injuries from a product However, a discovery rule says that if someone purchases an item with the expected life of more than ten years, they have twelve additional calendar periods before being able to sue for damages related to injuries.
Protect your business from faulty or malfunctioning products
If you manufacture, sell, or distribute products, we highly recommend that you buy product liability insurance for your Florida business. It’s essential to protect your business if one of your products injures someone or causes property damage.
Avante Insurance can help you secure the right product liability coverage for your business needs. Contact us to talk about your business and request a quote.
This blog and website are made available by the publisher for educational and informational purposes only. It is not to be used as a substitute for competent insurance, legal, or tax advice from a licensed professional in your state.