Product Liability Insurance vs General Liability | Summit Cover

June 14, 2023

Despite the untiring efforts you invest to start a business, it is crucial to ponder over product liability insurance vs general liability insurance and what other types of assistance should be there to serve as a backbone to your venture. If the products or services manufactured or provided by your organization cause any kind of injury or harm to your customers or their belongings, product liability insurance advances to safeguard your rights, integrity, and most importantly, the reliability of your service. Regardless of regular checks and balances, mishaps can occur anytime and there’s a possibility that your competitor might be favored with such challenging times and plots to dodge you.

Product liability insurance vs general liability protects you against the following claims:

  • Food contamination
  • Allergic reactions
  • Faulty designs
  • Manufacturing defects
  • Strict liability, in case, when you’re not guilty
  • Marketing negligence, such as labeling errors, lack of warning signs, etc.

Why is Product Liability Insurance Important?

Running a business is always challenging. Even if you become the public’s first choice, it will always be an industrious hustle. Both product and general liability insurances are essential if you’re manufacturing and selling your goods which may pose little threats to the surrounding areas.

For instance, if there’s a faulty product in your stock and someone buys it, there’s a possibility that the customer may hurt himself and may sue your business. In such a case, the insurance will cover medical or health-related losses, legal costs to defend the business as well as settlement and adjustment finances to ensure maximum protection of your organization.

This insurance is sometimes referred to as products-completed operations coverage because the ‘products’ defines the goods or services your firm offers, and ‘completed’ implies that the goods manufactured are a complete and whole entity.

Product Liability Insurance vs General Liability

Most insurance consultants present a package or bundle of these two, but there’s a clear difference between product liability insurance and general liability insurance.

While product liability provides coverage whenever someone claims damage to their properties by using your products or services, general liability insurance provides financial assistance to small businesses from accidental damages such as a customer slipping near or on your property, or maybe you’ve attacked the reputation of someone’s organization or copied their watermark or logo.

Why Should You Shop for Product Liability Insurance?

If you’re a manufacturer, distributor, or importer of specific goods or services, or running another relevant business, you should purchase product liability insurance vs general liability. A few examples of who should go for it are:

  • Manufacturers

Many manufacturers or designers are dependent on this type of coverage as it offers protection against faulty manufacturing and similar risks. As manufacturing industries are more expensive than others, the amount required to sign up for insurance could be greater than the requirement set for other policies.

  • Supply Chain Managers

If you’re working as a retailer, distributor, or as wholesaler, it is highly recommended to buy product liability insurance vs general liability even if you’re not directly responsible because in such cases, the customers are unaware and unreachable directly to the manufacturers so there’s a chance of them filing claims against your supply chain and sue you for distributing and dealing with defective products such as pharmaceuticals. Read more: product liability insurance cost.

  • Cosmetologists & Coiffeurs

The kind of public dealings that cosmetologists and hairdressers come across are too delicate to ignore because even the slightest inconvenience may cause a mountain of claims filed against you. For instance, your salon may unknowingly get involved in the distribution of substandard products. This insurance will help you defend your reputation and pay for the legal proceeding along with the provision of settlement costs, if necessary.

  • Food Service Providers

Of all the concerns, health is the biggest of all. Being a restaurant owner, you’ll never know if stale food is being served to the customers. If a diner gets sick after receiving food services from your eatery, he/she may drag you toward legal prosecution. Therefore, it is necessary to equip yourself with a suitable insurance policy that can be helpful for the payment of defenses and facing lawsuits.

What does Product Liability Insurance Cover?

Product liability insurance vs general liability helps you pay for legal expenses whenever your customers impeach you due to the usage of a faulty product or service that may have caused harm to his personal being, property loss, or any other serious damage.

  • Physical Damage

It provides coverage when there’s an occurrence of physical damage or harm because of the goods or products you’re manufacturing and distributing. Financial help will be offered for hiring an attorney, legal prosecutions, settlement costs as well as court-ordered adjustments.

  • Property Damage

The items manufactured under your surveillance or simply in your organization if held responsible for damaging the property of your customer may bring you to account by filing lawsuits against you. In such situations, the insurance will cover the costs associated with combating the allegations.

  • Disease Outbreak

This insurance protects against illnesses caused by the utilization of products that pose a threat to the living. In general, a disease outbreak is an outcome of the consumption of stale or expired foods or the usage of substandard beauty products in case of abnormal dermatologic conditions.

  • Accidental Death

If the usage of your product or service has caused an unfortunate incident of accidental death of your customer, all the relevant expenses such as burial costs will be covered by the insurance. For more details visit Summit cover.

What is not Covered by Product Liability Insurance?

The following are some examples of what may not be covered under the policy of products-completed operations coverage:

  • Product recall costs
  • Damaged or stolen goods
  • Employee injuries
  • Business interruption incidents
  • Software or IT costs

Investing in product liability insurance vs general liability depends on what and how many types of products or services you’re selling, the volume of sales, and the number of parties involved in the production. Besides, the greater the number of goods, the likelihood of the occurrence of error is multiplied. Therefore, choosing the suitable insurance plan would benefit you in the long run to certify the utmost protection of your small-scale or expansive corporations.

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