Product liability insurance is essential coverage for any business that manufactures, sells, or distributes products. While it’s true that this type of insurance protects against claims of bodily injury or property damage caused by a product, there are several myths about product liability insurance that can lead to misunderstandings and misconceptions about what it does and does not cover. Here are eight key myths about product liability insurance you need to know.
Myth 1: Insurance Covers Everything
This is the most common misconception about product liability insurance. While this type of coverage does protect businesses from claims arising from bodily injury or property damage caused by their products, it does not cover all potential losses. For example, product liability insurance does not cover losses related to faulty materials or manufacturing defects.
Myth 2: Everyone Needs Product Liability Insurance
While product liability insurance is important for businesses that manufacture, sell, or distribute products, it is not necessary for all businesses. If your business does not have any exposure to potential product-related claims, then you likely don’t need to purchase product liability insurance.
Myth 3: Waste of Money
This is not necessarily true. Product liability insurance can be extremely important for businesses that manufacture, sell, or distribute products. If a product causes bodily injury or property damage, the costs associated with legal defence and any settlement can be extremely expensive. Without product liability insurance, these costs could be financially devastating for a business.
Myth 4: It’s too expensive
Product liability insurance is quite affordable, especially when compared to the potential costs associated with a product-related claim. Many businesses find that the cost of the insurance is far lower than the cost of a potential settlement or legal defence.
Myth 5: It’s too complicated
Product liability insurance can be complex, but most policies are straightforward and easy to understand. It’s important to read through your policy and make sure you understand what is and is not covered before you purchase a policy.
Myth 6: It Only Covers Physical Injury
It’s important to note that product liability insurance does not just cover physical injury; it also covers property damage and economic losses. If a product causes property damage, or if a business faces economic losses due to a product-related issue, then the insurance can help cover the costs associated with these losses.
Myth 7: You Don’t Need Insurance If You Have Good Quality Control Systems
While it is true that good quality control systems can help reduce the risk of product-related claims, they do not eliminate the risk. Product liability insurance is still important, even if your business has implemented strong quality control systems.
Myth 8: It’s Only for Large Companies
Product liability insurance is not just for large companies; it is important for businesses of all sizes. Even small businesses that manufacture, sell, or distribute products need to consider purchasing product liability insurance.
Product liability insurance is an important type of coverage for businesses that manufacture, sell, or distribute products. By understanding the eight key myths about product liability insurance outlined above, you can ensure that your business is adequately protected if a claim is ever filed.