Product liability insurance provides legal protection to its insured in case they face claims brought by third parties for bodily injuries caused by products manufactured or supplied by the insured. Under such policies, an insurance provider would reimburse all expenses related to defending claims made against an insured party. Assuming you own a company which produces chocolates or food products sold directly to customers. Say, for instance, one of your customers becomes sick after taking your product and files a claim against it for deficiency; now legally obliged to make good the loss caused to that customer due to consumption, legally you are obliged to do so. Your customers could demand huge compensation amounts in response to irreparable loss suffered; such claims would likely run into millions and would not be possible to settle from your pocket alone; to cover this legal liability effectively you might purchase product liability insurance that protects against such claims from products sold by your business.
Product liability insurance would cover legal expenses and compensation payments related to claims for bodily injuries or property damages arising from third-party injuries or damage claims. Accident-induced property and bodily damage should occur for product liability insurance claims to apply. Consider mobile phones: they're manufactured and sold at such scale that every manufacturer would ideally possess product liability coverage in place, since claims could arise at any moment for any number of reasons. So many cases involve mobile phones exploding while speaking or being carried in pockets, leading to injuries and property damages, with accidents defined as events which happen abruptly and without prior warning, often with unexpected and adverse results, leading to bodily injuries of product users and consequent property damages.
Product liability insurance is crucial for both small and big businesses alike as it provides peace of mind and resources needed to fight liability claims that might arise from customers using their product accidentally; especially as small companies often don't have sufficient resources dedicated to fighting these liability suits that might include bodily injuries as well as property damages sustained as a result of these accidents. Unfortunately, small companies with restricted finances find managing product liability claims challenging as it makes managing legal cases while improving business difficult at once.
The importance of product liability insurance for business is explained below:-
Product liability policies provide financial security to their insured customers, particularly since liability claims tend to be awarded by courts and other authorities and its quantity cannot easily be estimated. Liability claims can take many forms; an excellent example would be third party death claims in motor insurance policies that vary significantly based on various variables and consideration by courts in making their determination of claimant quantities in cases involving liability policies. One cannot predict with precision the potential amount of liability claims that might arise and set aside an appropriate sum accordingly. Companies could save themselves the expense and financial strain associated with setting aside an uncertain sum for claims which have yet to materialize by purchasing product liability policies that would cover them on behalf of insured customers and cover claims on their behalf. This also gives insureds peace of mind as claims would be settled quickly on their behalf by third parties who provide coverage, making your money go further with every dollar saved and reduced financial strain on you as they grow your business.
Save the reputation
As part of your business operations, maintaining an impeccable reputation with both clients and customers is of vital importance. If they believe you cannot settle their claims promptly and satisfactorily, no one may transact business with you and this could significantly diminish sales volumes and profitability levels - which in turn would impact profitability levels as a whole. As part of your efforts to protect yourself from such situations, purchasing a product liability policy that reimburses victims on your behalf is vitally important. Imagine owning and operating a soap manufacturing business selling and distributing their wares throughout the market place. Due to an unfortunate event, one customer experienced complications after using your soap and filed suit in court against you. Now, as legally mandated, it is your legal duty to compensate customers who experienced inadequacies in service; failing to do so properly could endanger both your reputation and investors' perception of investing in your business. With product liability policies in place, however, claims would be settled by insurers on our behalf, protecting both us and them - saving time, effort, money, and our professional standing simultaneously.
Product liability policies provide customers with peace of mind when using your product fully, knowing they would be protected should complications arise in the future via product liability coverage. Customers would feel much more at ease using it knowing you will cover for any complications through insurance policies if any arise. Customers would feel encouraged to buy products knowing that any claims would be covered through product liability insurance coverage. Experienced businesses will utilize product liability coverage to settle customer claims more effectively, leading to improved customer satisfaction and retention rates. Smaller organizations could experience serious setbacks if a single catastrophic event ensuing from lack of protection results in product liability claims that must be covered without having insurance in place.
The claim settlement process in product liability insurance policy is similar to the other liability insurance plans and is mentioned below:
Step 1: First step of product liability claim settlement involves notifying an accident or event to an insurance company. As product liability involves third-party claims, information about them typically first reached the insured and then provided directly by aggrieved customers using their product, leading them to file legal cases or give notice directly. Once this notification has been provided to their insurers they should inform them in order to secure prior approval to fight legal battles legally on behalf of themselves and have costs covered by them as part of settlement of product liability claim expenses.
Step 2: In the next step, the insurance company may even opt for out-of-court settlements or arbitrations on a case-to-case basis. For every claim, the insured should duly fill and sign the claim settlement form, which has to be submitted to the insurance company to process the claim. The claim is paid based on any one accident, which is the maximum limit for a claim, and Any one year, which is the maximum limit for the year.
Step 3: The next step is to submit all the required documents on time for the claim to be processed regularly.