What are the features of product liability insurance?

Product liability insurance is designed to protect businesses from financial losses associated with legal claims arising from defective products that cause harm or injury to consumers. The features of product liability insurance can vary based on the specific policy and insurance provider, but common features include:

  1. Coverage for Legal Costs:

    • Product liability insurance typically covers legal expenses associated with defending against a lawsuit. This includes attorney fees, court costs, and settlements or judgments.
  2. Medical Expenses Coverage:

    • The policy may cover medical expenses for injuries caused by the defective product. This can include hospital bills, doctor fees, and other related medical costs.
  3. Compensation for Damages:

    • If the business is found liable for injuries or damages caused by a defective product, the insurance may cover the compensation awarded to the injured party.
  4. Coverage for Manufacturing or Design Defects:

    • Product liability insurance generally covers claims related to both manufacturing and design defects. This provides a broad scope of protection against various types of product-related issues.
  5. Coverage for Failure-to-Warn Claims:

    • Policies often include coverage for failure-to-warn claims, where the injured party alleges that the product lacked adequate warnings or instructions.
  6. Coverage for Recall Costs:

    • Some policies may cover the costs associated with recalling defective products from the market. This includes expenses related to notifying consumers, retrieving products, and managing the recall process.
  7. Coverage for Legal Defense Even in Unfounded Claims:

    • Product liability insurance typically covers legal defense costs, even if the claims against the business are unfounded. This is important as legal defense expenses can be substantial, regardless of the merit of the claim.
  8. Coverage for Third-Party Claims:

    • The insurance may cover claims not only from direct customers but also from third parties, such as bystanders or users who were not the direct purchasers of the product.
  9. Aggregate and Per-Occurrence Limits:

    • Policies often have aggregate and per-occurrence limits. The aggregate limit is the maximum amount the insurer will pay during the policy period, while the per-occurrence limit is the maximum amount the insurer will pay for a single claim.
  10. Tailored Coverage:

    • Product liability insurance can often be tailored to the specific needs and risks of a business. This allows for customization based on factors such as the industry, types of products, and sales volume.

It’s important for businesses to carefully review and understand the terms and conditions of their product liability insurance policies, including any exclusions or limitations. Additionally, coverage may vary, and businesses should work closely with their insurance providers to ensure they have adequate protection for their specific circumstances.

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