Another type of liability insurance is the product liability insurance. In today's new compensation culture, most people know their rights and they want damages to be paid by the companies that provide faulty or harmful products. In most countries this insurance product is not compulsory but in some countries a certain amount of product liability on the goods is a must in combination with liability insurance.

Product liability insurance

A product is defined as any good that is given away to the customers for some amount of money. The manufacturer is legally responsible if his product causes damage to consumers. Many supplier businesses usually buy the products from the manufacturers. In case the product is sold with the brand of the manufacturer then the supplier is not liable for any claims but there are cases when the supplier becomes liable. These cases include; if the supplier repairs or changes the manufacturer's products, if the manufacturer's business is liquidated or ended, if the manufacturer produces a product with suppliers brand name then in all these cases the supplier becomes liable.

Factors affecting Premium

There claim and premium is affected by the nature of risk factors which include, who is the customer, where and how the product is used and what are the warnings and respective labels on the products.

What is covered?

The product liability insurance provides compensation to the people who got injured by the product you sold. In case of any financial loss to the person who used the product, the insurance policy may not provide the compensation for such a loss. Likewise, inferior products and bad workmanship is also not covered in product liability insurance.

Insurance company checks

The insurance company checks whether the equipment used and the manufacturing process is well maintained or not , does the company follow best industry practice for manufacturing the products and whether the employees are well trained or not. The cover and the premium rate is decided after the insurance company assessments.

How much cover to take

The usual cover taken by most of the companies for product liability insurance ranges from $1 million to $5 million. Usually businesses opt for $2million.

Property owners' liability insurance

This insurance product covers the damages that are awarded to people on your premises. Any accident such as falling due to wet or muddy floors or due to broken fences etc can result in a claim. Usually property owner's liability insurance is included in the household policy.