How to Know If Your Business Needs Product Indemnity Insurance

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Liability is not a word many sellers and manufacturers like to use or hear in a sentence containing one or more of their products. However, like it or not, product liability is major theme that, whether you make, sell, or lease a product, you should be well aware of. Unfortunately, somewhere along the way in your business, more likely than not, you will be found liable for an injury caused by a product that your business sells to the public.

Having adequate defective products indemnity insurance coverage is essential to anyone who distributes products (whether you make, sell, or lease them does not matter). There are basically two types of product liability. Understanding these will not only help you in realizing why you need product liability insurance, but also help you prevent any future insurance claims. The first type of product liability is that based on fault. If a person is injured by a product because the product was misrepresented to that person, such as omitting to disclose a defect about the product, the distributor of that product can be held liable for intentional misrepresentation or fraud. If the product is assembled incorrectly, the product failed to be tested, or failures of due care are committed by the distributor of the product, that person can be held liable through an action of negligence.

The second type of product liability is that which is based on strict liability. Strict liability is a somewhat more advanced topic, as it applies liability without fault. It is under this type of product liability, for instance, that a product would fall if there a defect that results from inadequate instructions. Questions concerning strict liability and its implications on your product would be best left to an attorney to answer on a one on one basis. Regardless, hopefully this small introduction about product liability does help express the magnitude of product liability. Product liability is applicable to every product manufactured, sold, or leased. Therefore, product liability insurance at essential to all those who distribute products.

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