Product Liability Insurance
No matter how high your standards may be or stringent your quality control processes are, the risk of a third-party claim, or worse, a class action lawsuit will never be out of the picture. It happens even to the biggest companies. Regardless if you are a manufacturer or a seller of any type of product to the general market, getting product liability insurance for your business will be one of the greatest decisions you’ll never regret. Here’s why.
What Is Product Liability Insurance?
Product liability insurance is an important policy specifically designed to provide coverage for manufacturers or sellers from any potential financial loss due to third-party claims involving:
- Any form of physical injury or illness
- Damage to property
That was caused by using or being exposed to a defective or harmful product that can be traced back to you, whether as a manufacturer, supplier, distributor, or seller. Interestingly, third-party claims can be filed not just by customers who actually bought your product but even bystanders who were exposed to it and sustain injuries.
In general, product liability insurance in Toronto can be based on one of these scenarios.
The third-party claim alleges that the issue stems from the manufacturing process that ended up with the product becoming harmful for the customer.
In this case, the root of the product malfunction is in the design itself, failing to meet the standards of safety or usability.
Customers can also file complaints about a faulty product that was used inappropriately due to the absence or lack of sufficient warnings or safety instructions about its use or contraindications. Incorrect labelling or false advertising belongs in this category, too.
Even with strict quality control, manufacturers and sellers that did not commit any of the mistakes mentioned above can still be successfully sued for liability if the customer filing it can provide strong evidence that:
- The product was used as it was intended
- The product is, in fact, harmful in any way, shape, or form
- The customer did not alter the product, which resulted in injury
KASE Insurance is a reputable and reliable provider of different types of completely customizable commercial insurance for various industries, including product liability insurance in Toronto.
Why Is Product Liability Insurance so Important?
The unfortunate truth about a single customer filing a third-party claim is that they have the power to trigger a domino effect, inspiring other customers with similar negative experience from using your product to come forward and creating a bigger class action lawsuit against you.
When this happens, it is easy for you to lose everything you have worked hard for in a snap. Aside from the possibility of a massive product recall, there is also a tendency for all your operations to be ceased, resulting in more income losses. Furthermore, there is also the negative publicity that comes with it, which can turn into a major “make or break” situation especially in the Digital Age where rumours can spread like wildfire on social media and in effect permanently ruin your brand’s reputation.
This is why having a product liability insurance should be a non-negotiable priority for every business owner. This is because it gives manufacturers and entrepreneurs the assurance that they will have access to all the funds and resources they need to steer their business back on track.
What Does Product Liability Insurance Cover?
Depending on your specific arrangements with your insurance provider, product liability insurance will cover the compensatory damages for the injured plaintiff/s, which may include medical expenses, income loss, damages to property, finances spent on legal fees, and trauma for pain. At KASE Insurance, the coverage of our product liability insurance Toronto can be custom fit to your company’s specific requirements.
Who Needs Product Liability Insurance?
Unfortunately, it’s a common misconception that it’s unnecessary for small businesses, let’s say, a family-owned bakery, or that it is too expensive. But believe it or not, all businesses can benefit from having product liability insurance. A third-party claim can be especially devastating for smaller businesses because of the cost of going to court, paying for compensatory damages out of pocket, and the possibility of shutting down your business both temporarily and permanently.
Whether you are producing your own products or selling them to customers in a traditional brick and mortar store or online through an e-commerce platform, you need a product liability insurance to protect you, your brand, and your staff who can potentially lose employment.
Product liability insurance is applicable to all types of businesses selling any form of tangible goods. These include the following:
- Furniture boutiques
- Clothing shops
- Pet stores
- Coffee shops
- Hardware stores
- Printing shops
- Food distributors
- Toy stores
- Home and kitchen appliance stores
- Specialty stores
Even if you do not directly transact with consumers, you still have the risk of encountering a third-party claim when supplying any form of product to other businesses. For example, if you are providing raw materials or equipment to another entity.
How Much Does Product Liability Insurance Cost?
As with all insurance policies, the rates for product liability insurance varies and depends on the specifics of a company. Naturally, businesses that manufacture or deal with products that have a higher hazard risk, such as pharmaceutical drugs or chemicals, may have higher premiums or in some instances be required to consider more sophisticated insurance coverage.
Why Choose KASE Insurance?
At KASE Insurance, we always look out for your best interest. We offer one of the best product liability insurance in Toronto bundled with our comprehensive liability insurance policy.
Would you like to know more about product liability insurance and other approaches that you can take to future-proof your business, we encourage you to reach out to us immediately. A KASE Insurance team member would be more than happy to respond with a quick quotation or schedule you for a no-commitment consultation with one of our lead brokers to expertly discuss your concerns in detail.
Read what clients have to say about KASE
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