A business purchases product liability insurance to protect themselves from liability against the allegation of negligence in the manufacturing, packaging/labeling, warranty, distribution, or sale of its products. The 1987 Consumer Protection Act holds manufacturers, distributors, retailers and others liable for products that are not “fit for purpose” and personal injuries or illness to a third party that may result from their unfitness.
The year 2006 saw the peak in product liability lawsuits; accounting for 20 percent of all cases tried in federal court compared to about 12 percent the following year. Product litigation tends to go in trends with people jumping to sue on common issues such as asbestos in the workplace or prescription drug side effects. Some jurisdictions require that companies carry product liability insurance to protect consumers in the event of widespread consumer injury.Read More