It’s important to know that many small and even large companies actually go out of business or suffer severe financial damage because of the expenses associated with business-related law suits. This article will explain how you can protect yourself and your business.
A Look at Professional Indemnity and Product Liability
A business product liability insurance policy protects against law suits arising from defects or lack of warnings on the products you sell or manufacture.
We are discussing professional indemnity insurance policies. There is also another type of insurance coverage for businesses: general liability insurance but it doesn’t cover most risks outside of trips and falls and basic mishaps.
If you own a business that manufactures a variety of products, or stock items for sale to members of the public, then you are certainly in desperate need of product liability insurance coverage.
Of course, you may be tempted to ask why. And the answer to that very important question would be plain to see when one considers the glaring fact that, manufacturers and retail businesses today are being forced to accept more and more responsibility for every item they produce or sell due to the increasingly litigation-prone and cutthroat society they now operate in.
With this kind of society also comes an increased level of awareness among customers pertaining to their consumer rights, especially their right to seek legal redress against any business that sells or manufactures a product which directly or indirectly causes them damage or bodily harm upon its use or consumption.
Moreover, with an abundant supply of juries and judges who are sympathetic to the plight of injured customers or third parties, the chances of a business emerging unscathed from a product liability suit are very slim.
Product liability insurance coverage is therefore, the only protective tool that can adequately shield a business from the financial implications that typically come with legal defense, related medical expenses, and legal compensations that may be awarded to plaintiffs by the courts.
Another burning question a lot of business owners often ask is: When is the right time to get product liability insurance coverage? And the appropriate answer to this question is, NOW!
In fact, as soon as a business that intends to manufacture or sell products is established, the next thing to do is seek out a viable and comprehensive product liability insurance policy.
Professional indemnity insurance policies were created to address the exclusion in the product liability insurance policies and general insurance policies related to professional services.
This type of policy covers any negligence, errors made, or data omitted on the part of a professional service provider as they go about executing their service activities.
Examples of services using this type of insurance would be drafting of specifications, studying feasibility and possible scenarios, performing calculations, creating maps, designing elements, and supervising all of those activities.
Professional indemnity policies, also sometimes called errors & omissions insurance, protects a business, its employees, and any directors of the business against legal responsibility due to professional negligence.
These policies cover the compensation required to be given to a third party who might have suffered an injury, loss, or property damage arising from negligent acts, errors, or omissions in the professional service rendered.