Product liability can have disastrous financial ramifications for businesses. They may be liable to multiple parties or even be subject to a class action if faulty products harm an extensive number of people. Good quality controls and a risk management strategy that includes product liability insurance can safeguard businesses against this type of problem.
Cover Defense Costs
Even if a business’ product is not actually responsible for a person’s injuries, it may incur significant legal expenses in establishing that it is not at fault. An insurance policy can equip a business with a strong legal defense without bearing direct costs.
Avoid Pending Claims
An insurer’s legal team may be able to defeat invalid claims promptly. A swift resolution may help spare businesses from having pending claims which could affect the costs of renewals for other insurance policies or undermine their ability to get loans and financing.
Pay for Settlements
In some instances, the best course of action for a business facing a legal claim is to settle it. Insurance coverage can pay to settle a claim so that a business can avoid long and drawn out litigation which may generate negative publicity.
It is difficult to project the potential liability that defective products can create for both manufacturers and distributors. Effectively managing risk requires an abundance of caution and comprehensive insurance coverage.