WEDNESDAY, SEPTEMBER 23, 2020
General liability insurance covers your business if your mistakes or negligence harm others. Still, you don’t have to actively do something to someone else to be at fault for their losses. At times, you might be responsible for a loss because you failed to catch a potential a problem in your products.
Because you make a product, you might have to pay up if the product harms someone else. That’s why most general liability policies include coverage called product liability insurance. Here’s how it works.
How to Use General Liability Insurance
A liability is the responsibility you have for something else. So, the risks that you pose to others in your business are your liabilities. Because of this, if someone gets hurt in your business, then you might have to repay them.
General liability insurance is the coverage you can use to do so. It can compensate the affected party for bodily injuries, property damage and certain personal injuries (libel, slander) for which you bear responsibility. It might pay medical bills, cover lost income and legal expenses for the affected party. It can protect the business from having to pay these costs on its own.
Someone might get hurt simply by entering your business and falling in a puddle. However, in other cases, a product you provide might cause them a loss. Therefore, most general liability policies include product liability coverage.
Understanding Product Liability Coverage
General liability insurance usually includes product liability coverage for a simple reason. Your products continue to affect people even long after they leave your business.
Suppose, for example, that you manufacture artisan soaps. A client who uses the product suffers a severe allergic reaction. They see that you failed to disclose the item that caused the reaction on your soap's packaging. Therefore, they might blame you for their illness. They might sue you for medical bills, lost income and other pain & suffering.
If you have product liability insurance, then you’ll have a resource available to help you compensate a client for their losses. The policy can also help you cover your own legal fees that rise from the lawsuit. You can address losses without causing yourself a significant financial loss.
Plus, product liability insurance can often extend to projects that you do for others, too. If you work in construction, for example, then there is a chance that your work might fail after you finish a job. Most product liability insurance often covers completed operations, too, as a result. They'll cover damage that arises after you finish your work and go home.
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