Many people who own businesses understand the importance of getting liability insurance for their business, but only a few of them realize that there are different kind of liability policies available. The main three types of liability insurance policies are product liability, professional indemnity, and general liability.
First, let's discuss product liability insurance. The first thing is to know what product liability is. Product liability is a responsibility a business or entity who is involved in the distribution of products bears in a legal sense towards a person using their product. This responsibility, or liability, comes into play when a claim is brought against an entity because a consumer suffered physical harm, property damage, or loss due to the product.
Manufacturers can be held responsible for poor manufacturing, defects in the workmanship of the product, faulty materials, or individual parts of the product that don't work well. They can also be held responsible for a lack of warning documentation regarding how the product should be properly used, and what could happen if the product is improperly used.
Other entities are also just as liable for damages incurred while using a product. Under United States law, a consumer is allowed to bring a claim against any company involved in the distribution of a product that caused damage, regardless of
whether or not they manufactured said product.
The next point about product liability, is that the person bringing the claim doesn't even have to be the person who bought the product, or the person who used the product! If an innocent bystander happens to incur injury or damage because of a product malfunctioning, they have every right to bring a claim against the companies responsible for releasing that product that caused damage.
Professional indemnity, unlike product liability, covers only service type claims. Most of the time, omitted information is the cause of claims; but anything not provided or done accurately under a service-based agreement is cause for liability. Most service-based professionals such as accountants, lawyers, doctors, and consultants use this type of insurance for protection.
This type of insurance is a must-have for any type of service industry. Imagine the consequences if, as an architect, you miscalculated on the drawings and a house was unable to be completed, halfway into the building process. Or worse yet, if the house suffered a structural problem because of incorrect blueprints!
General liability contains a small amount of product liability insurance, and generally does not contain professional indemnity insurance. This type of insurance is where most businesses begin looking, and are referred to the other, more specific types of insurance if necessary.
Author Resource:-
Gemma-Leigh Garner is a freelance copywriter that writes on business & insurance topics such as product liability insurance http://www.products-liability-insurance.com & helping business owners know more about choosing the right liability policy.
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