If your business manufactures or sells products to the public, product liability insurance can be very important. It’s designed to protect you from legal action by individuals who claim to have suffered personal injury or property damage from using or being exposed to the items you provide.
The most famous instance of this is arguably the McDonalds hot coffee case, a 1994 American lawsuit which saw an elderly woman sue the fast food giant after she suffered third degree burns from a drive through cup of coffee she’d spilt in her lap. Her lawyers argued that because of the high temperature at which the company required it to be served, McDonalds coffee was more likely to cause serious injury than the hot drinks sold by other outlets. The woman was subsequently awarded damages of almost $US3 million, a sum later reduced on appeal.
Irrespective of whether or not they’re at fault, personal injury and property claims can be ruinously expensive for small businesses that don’t have the deep pockets of their multinational counterparts. Product liability insurance can help defray the cost of defending an action against your business and of any damages you may be required to pay.
Additional cover for high risk businesses
To make protection simpler and more cost effective, many insurers offer bundled public and product liability policies tailored for small businesses.
Public and Products Liability is considered to be one of the most important insurance covers for all businesses, but – depending on the nature of your product offering – it’s possible your business may require higher or more specialised product liability cover.
Product Recall Liability insurance
If you are a manufacturer, processor or distributor of goods you should have Product Recall Liability insurance. A Product Recall Liability policy protects your business from the significant financial and reputational costs associated with a product recall.
Whether it’s products like food, beverages, cosmetics, electrical equipment, pharmaceuticals or household appliances, the product recall process is extremely expensive, and can be highly damaging to even the largest companies.
A Product Recall Liability policy is there to cover you for the costs associated with a product recall:
- Cover for the cost of withdrawing products off shelves
- Cover for the cost of replacing the recalled product on shelves with ones that are deemed safe
- Cover for expert advice and assistance on managing your brand reputation in the public domain (product recalls are increasingly receiving widespread media publicity)
Product Recall Liability looks to significantly reduce the impact a product recall can have on your business, empowering you to make decisions for the future with greater confidence.
Expert advice to help you get it right
Product liability is a complex affair, with numerous contingencies to consider. Whitbread’s experienced brokers will help you work through them to identify policy options appropriate for your circumstances. General Manager of Broking, and commercial insurance specialist, Andrew Saville says.
“Understanding the nature of your organisation and its risk profile is critical. The right broker – with deep industry insight – isn’t just ticking boxes, they’re aligning your product liability cover with the scale and scope of your operations.”
Cover when it counts
If it’s been a while since your business has reviewed its product liability cover, now is a great time to do so.
Whitbread are here to help you to determine what type and level of cover will best meet your needs. Please contact your Whitbread insurance broker if you’d like to review your current policies or chat about your requirements in greater detail.
T: 1300 424 627
E: info@whitbread.com.au
Important notice
This article provides information rather than financial product or other advice. The content of this article, including any information contained in it, has been prepared without taking into account your objectives, financial situation or needs. You should consider the appropriateness of the information, taking these matters into account, before you act on any information. In particular, you should review the product disclosure statement for any product that the information relates to it before acquiring the product.
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This article is not intended to be personal advice and you should not rely on it as a substitute for any form of personal advice. Please contact Whitbread Associates Pty Ltd ABN 69 005 490 228, License Number 229092 trading as Whitbread Insurance Brokers for further information or refer to our website.
