Why Retail Stores Need Product Liability Insurance

Product liability insurance is needed by businesses that make or manufacture products, by businesses who import or distribute products, and by stores that sell products to consumers. At first glance, it is easy to see why a manufacturer would need liability insurance in case a product that they make is flawed during the manufacturing process or is found to be hazardous due to the faulty design of the product. However, importers, distributors, and retail stores also need a policy to cover liability as well.

The theory on who needs product liability insurance is best seen in a recent pet food recall involving the country of China. China made tainted pet food that was imported by a Canadian company with two physical US locations. The Canadian company supplied the US Wal-Mart stores with the tainted pet food that was then sold US consumers. Many pets died from the tainted pet food that was sold by Wal-Mart and these unhappy pet lovers started to sue for product liability damages through their US court systems.

Product liability insurance is needed by a manufacturer, unless that manufacturer is outside of the United States realm of control. The pet lovers could not sue the China manufacturer for damages, and even if they tried to sue in China, there is no easy way for a United States citizen to collect court orders damage money from another country.

Product liability insurance is needed by importers and distributors. The Canadian importer was from out-of-country, but did have two locations within the United States that were under United States control. The Canadian importer/distributor could be sued by the pet lovers.

Product liability insurance is needed by retail stores when they sell products. Wal-Mart had many lawsuits placed against them by the pet lovers for selling the pre-packaged food that killed their pets.

As is seen in the above example, the pet owners had the right to completely ignore the manufacturer in China who was the prime culprit in favor of suing the easier people to get to. Product liability laws in the United States can hold all people who come in contact with faulty products responsible to pay for damages if a consumer suffers injuries that are brought about by a faulty product. Product liability insurance is a necessity for all sizes of businesses that deal with consumer products in any manner. Injury claims in court often result in large amounts of damage money being awarded; this can ruin your business.