Do You Need Product Liability, Recall And Contamination Insurance?

If you own a business that sells, distributes, manufactures or designs products, product liability insurance could potentially keep you from having to close shop because of hefty costs incurred when something goes wrong.

It’s wise to consider adding product liability coverage to your general liability policy in order to protect your company should there be a problem.

What Product Liability Insurance Covers

Product liability coverage can protect you in a variety of scenarios related to:

1. Product flaw

Whether your company is involved in the design, manufacture, assembly or packaging, you need coverage. Even if you’re only responsible for a small part of the process, your business could be liable. A policy would be there for you when you need it, including for legal defense fees.

2. Communication issues

If your product’s instructions, usage warnings or marketing can be shown to lead to misuse resulting in injury or property damage, your company could be held liable.

3. Business requirements

Companies you do business with, such as partners, investors and affiliates, may require you to hold a product liability insurance policy.

Recall Coverage

Recalls are not uncommon, and the process can be expensive for a company. A product liability policy can help with costs related to the recall and repairing your reputation. Benefits can include covering of costs for marketing and promotions, shipping, replacing, repairing and distributing, business interruption, destruction and disposal of the product, and any fees incurred.

Contamination Protection

Add contamination coverage to your policy if there’s a chance your product can be contaminated, whether on purpose or inadvertent. Recalls are particularly a danger with food products. Restoring your company’s reputation and profits can be damaged. Examples of what contamination insurance can cover include:

• Recall expenses related to third-party costs, announcements and promotions, lab analysis and shipping.
• Operational costs such as loss of profits and increased expenses.
• Product value including what was contaminated and sold as well as the remaining inventory.

When you own a business, you need to be prepared for the possibilities. Learn more about protecting your business with different kinds of coverage and compare quotes before you purchase a policy.