California Product Liability Insurance

Simply put, liability insurance protects you from lawsuits. This includes the any bodily injury or damage to another's property that occurs on your premises or as a result of you or your employee's negligence. In covers customers, suppliers, delivery persons, employees, vendors, visitors, in short, virtually anyone but you, the business owner.

Your General Liability (GL) policy covers you for a wide variety of situations. If you have a Business Owner's Policy (BOP), it likely includes a broad form GL policy in the package. It is your GL coverage that protects you against most of the losses mentioned above. It may also include some limited coverage for things like libel, slander and other specific causes of loss. It is important to read your policy carefully, especially the exclusions. These policies are written to cover a broad range of business risks but also carry exclusions that could be important to your business. All policies are not created equal. There is simply no substitute for reading and understanding the policy. Your agent should be able to help you understand what is covered and what is not.

If you are a manufacturer, you need Product Liability coverage. Should you have any doubt about this, I would encourage you to visit any retail store and read the warning labels on products on the shelf. Many of the warnings sound silly. A group called The Michigan Lawsuit Abuse Watch (M-Law) annually published a list of crazy warning labels. Last year's winners included a toilet brush with the warning "Do not use for personal hygiene." The point is that each of these crazy warnings came about because somebody sued the manufacturer of the product (perhaps even a lot of somebodys). Juries can award huge judgments against manufacturers even if there was blatant misuse of a product. Your Product Liability coverage will protect you.

When all other policy limits have been exhausted, your Umbrella Policy will cover any additional judgments, up to the policy limits. Because they usually require you to carry large limits on your other policies, like $500,000 or even $1 million, umbrella policies tend to be relatively inexpensive for the amount of coverage they provide. This is because it is rare for any lawsuit to reach $500,000. Given their nature, umbrella policies tend to offer very broad coverage, but as with any other insurance, read the policy carefully.

Different types of liability coverage have developed over the years do address specific business needs. When buying a liability policy, you should be aware that there are two types of coverage, occurrence coverage and claims-made coverage. Occurrence coverage is more expensive but covers you based on when the loss happened, even if it was many years ago. Claims-made coverage only covers you while the policy is in force and the claim is made. With occurrence coverage, as long as you always have some policy in force, you will not have gaps in coverage. With a claims-made policy, it is possible to have gaps when you have not coverage in force. Purchase an occurrence policy unless you have no other choice.