Is Your Product the Next Big One?

If your company is looking at developing a new product or has one ready to hit the market, you have chosen, what we believe, is an ideal time to launch a new product, and the timing couldn’t be better.

The sheer amount of new products being launched each week is truly remarkable, and it seems there will even be more in the coming years. It’s an exciting time to bring a new product to market.

If you are a start-up operation or have been operating in the product business for years, whether your company is involved in the design, distribution, or manufacture of such products as diet/nutritional/health products, child/baby products, clothing products, medical devices, liquor/beer products, e-cigarettes, beauty & cosmetic products, food products, or one of the many diverse products that touch our lives each and every day, one item that should be at the top of your do-list should be acquiring a Product Liability Insurance Policy. It could be the difference between staying in business or closing it down should a claim or lawsuit be filed against your company.

One familiar sentence we almost always hear from companies seeking product liability insurance coverage is that they feel their premium should be at the lower end because they couldn’t imagine that their product could ever harm someone resulting in a claim or lawsuit filed against them. There is a very old saying, “Never say never!!” At any point in time, something could happen, and that is not the time you want to be without Phoenix product liability insurance coverage.

For any business that has a product in development with plans to become either a distributor, manufacturer, or a retailer, acquiring a PHX Product Liability Insurance Policy is vital to the success of your business. It doesn’t matter where your business fits in the product cycle when a customer is firmly convinced that the product they purchased caused them any kind of harm, it is almost a certainty that they will file suit against all companies in the product chain, and that kind of legal action could result in your business suffering monetary damage and taking up an enormous amount of your time that would normally be devoted to making your business a success. This legal concept is known as a stream of commerce, and it governs product liability in almost all states. This type of legal concept means that any company that has any involvement in placing a product into the commercial stream could be held liable for a defect, which, in turn, can expose the company to the risk of paying damages for the defect. Assuming that the customer won their claim, they could also be awarded compensatory and punitive damages, medical expenses, and even their legal fees.

In most cases, these types of claims focus on these three main issues:

Defective Warnings/Instruction:

Have you ever read some of the warnings that have been written on the side of any of the products you have purchased and wondered, isn’t this just common sense and someone has to have it spelled out for them? With the increase in lawsuits being filed against product companies from customers who feel they have suffered in some way from using the products, companies are now putting detailed warnings on their packaging. You may want to consult an attorney to consider whether you should put warnings on your packaging.

Design Defects:

When discussing this type of claim, in most instances it refers to how the product was designed in the first place. An example of this type of claim would be car manufacturers. When designing your products, we urge you to be as careful as possible and have a plan to review all designs often.

Production/Manufacturing Flaws:

This type of claim, in most cases, involves a product that is defective as a result of the company’s production process, thus making the product unsafe.

Even if your company has done all that is humanly possible, taking every reasonable precaution, things do happen every once in a while which, in turn, could harm a customer, making your company liable, therefore, the need for a Product Liability Insurance policy. In securing Scottsdale Product Liability Insurance Coverage, the insurance carrier can have a duty to defend your company for a covered peril, paying for the costs to investigate the claim that was brought against your company, and to settle any settlements or judgements that may be levied against your company up to your policy limits.

When looking into these types of policies, the rates are not standard. The reason for this is that there are so many variables when it comes to these types of risks. Is your company going to manufacture, distribute, market, or any combination of these, and what is the risk of your product on the buying public? If your product poses what the insurance carriers determine as a smaller risk, then your premium will be at the lower end of premiums, and if it potentially poses a higher degree of risk, the premium will be adjusted to reflect that type of risk. Regardless of where your company is in distributing a product or simply selling a product, or developing/manufacturing a product, PJO Insurance Brokerage has access to some of the finest insurance carriers near Phoenix to help you develop the proper insurance plan to suit your company’s product liability needs. We welcome the opportunity to work with your company.


Written By:

Patrick O'Neill, Commercial Insurance Agent from PJO BrokeragePJO Insurance Brokerage
4103 E. Prickly Pear Trail
Phoenix, Arizona 85050

Office: 480-248-7495
Fax: 480-248-7493