Sometimes products are designed or manufactured incorrectly.  When they do, they can cause damage to property, personal injury, or even death.  When this happens, and it does on a regular basis, there are many entities that can be held financially and even criminally liable. 

Whether you are a manufacturer, reseller, shipper, warehouse, or anyone else in the supply chain, you could be held responsible.  Even if the damage caused is not your fault, you are still exposed to legal action.

How to Protect Yourself from Product Liability

There is no foolproof way to avoid selling products that can cause damage or injury.  But by carrying product liability insurance, you can protect yourself from the financial impact a judgement against you will cause. 

This aspect is especially important for resellers.  With the explosive growth of ecommerce, and the relative ease of entering the business, there are many people reselling goods that have never done it before.  For many, it is a part-time enterprise, with little or no experience in reselling goods.  A novice reseller may not be aware that they can be held financially responsible for damage from a product they did not make.

Marketplace Resellers

In 2019, just over half of ecommerce purchases were made through a marketplace seller.  Most marketplace sales are from small businesses who buy finished products and resell them.  They are not the manufacturer.  In some cases, they are a one-man operation, working out of someone’s garage.  It is an easy and inexpensive way to get a business started. 

What these people need to understand is that even though they had no hand in making the products, if the product causes damage or injury, they can and most likely will be named in a lawsuit.  The financial damages could easily and quickly bankrupt an individual.  The seller may not even be aware that the product they are selling is dangerous. 

Even though they were not part of the manufacturing process, and may have no awareness that the product is not safe, they are legally liable.  Basically, it is impossible for a reseller to have all of the knowledge they need to protect themselves from product liability.  Therefore, one of the most important kinds of insurance to have is product liability. 

Perry Goldstein
Perry Goldstein

Perry Goldstein is an electronics industry veteran, with over 40 years of experience in manufacturer sales and marketing in both the consumer electronics and Pro A/V spaces. He has managed sales in both B2B and B2C markets.