No matter how hard they try, it is challenging for businesses to manufacture high-quality products without the risk of failure. Those potential defects, in turn, have consequences that would harm the customers. When this happens, businesses are liable for property damage or bodily injury. Therefore, product liability insurance for small businesses is necessary to cover losses and protect these firms in the case of a lawsuit. Call for a free consultation with a Bayonne Personal Injury attorney regarding product liability coverage. Here is general information you should know about the policy:
Why apply for product liability insurance?
The law does not require businesses to have product liability insurance, meaning you can operate without one. On the other hand, you are legally bound to be liable for your customers’ safety if you are a seller, manufacturer, or supplier. You could face legal action if the goods you delivered harm the buyer. When faced with a lawsuit, all you will have to do is make a claim with the insurance for compensation and the costs involved. Without the cover, the whole burden will fall on you, which may be heavy for a small business to survive.
What is covered in the product liability insurance?
You have the same responsibility of safety to customers regardless of the size of your business. You will be sued equally if you sell jewelry for fun as it would be for a larger company. It would also come to you at any position in the chain. For example, manufacturers, retailers, distributors, and suppliers are liable to ensure the customers’ safety. You are responsible if:
- The name is branded: All branded goods, including promotional ones, fall under your responsibility in case of an injury.
- You’ve changed the product: If you restore or repair a customer’s product, the law finds you liable if you cause further damage than there was initially.
- Manufacturer is unknown: Liability will automatically fall on the manufacturer. However, if they are unknown, you will be responsible if the product causes harm to the customer or their product.
- The manufacturer is no longer in business: The law finds you liable if the company that manufactured the faulty product has gone out of business and is no longer trading. This is because it becomes impossible to seek compensation from the original manufacturer.
Will you receive protection even if you did nothing wrong?
To begin with, very few firms would intentionally sell defective products knowingly. Therefore, you might be unaware but still face a lawsuit. Additionally, you are at risk at whatever position you occupy in then distribution. Customers may even claim that there are insufficient instructions or warnings and demand compensation. Lastly, you will be involved in a lawsuit even if the claim is frivolous.
As a small business, the costs of a lawsuit may be unbearable to handle. They may even force you to close down the business. However, with product liability insurance and a competent lawyer to help you deal with insurance claims, you are protected. Call 201-829-3805 to discuss your issue with a Bayonne Personal Injury attorney for fair compensation of losses and costs.