Even if your business places safety at the forefront, there is still a chance that one of your products malfunctions and causes serious injury to a customer. In the worst-case scenario, this malfunction may lead to the customer’s death. If your business sells any goods and products, it is essential to understand how product liability insurance can provide coverage—especially in regard to claims of wrongful death.

What is wrongful death? 

A wrongful death claim arises when a person has died as a result of the negligence or misconduct of another party. These claims are made by the surviving family members or beneficiaries who may have been financially dependent upon the decedent. Wrongful death claims aim to compensate these individuals for the financial losses they sustain due to the death. These damages include: 

• Incurred medical expenses 
• Funeral and burial expenses
• Loss of earnings the decedent would have made during his or her expected natural life
• Loss of inheritance
• Loss of services the decedent provided
• Loss of consortium
• Pain and suffering of survivors

How is your business at risk from wrongful death claims?

There are countless ways your product may lead to the untimely death of a customer. Your product may have included inadequate safety warnings or incorrect instructions, or your product may simply malfunction, leading to an accident that was impossible to foresee. Product defects can increase risk of wrongful death claims in a variety of ways, including: 

• Design defects, or flaws in your product’s design and the understanding that a safer design alternative was available. These defects often lead to a mass recall of the product.
  
• Manufacturing defects that occur during the assembly or manufacturing of your product.
  
• Marketing mistakes, including  failing to provide customers with the information needed to safely use your product. Inadequate warnings or poor instructions can lead to fatal accidents.

Example:

• Toy manufacturers use a substandard glue to attach small plastic eyes onto a doll. Although the eyes fall off easily, there is no warning label on the doll. After purchasing this doll from your small shop, a child chokes on the small plastic eye. You and the toy manufacturer are sued for wrongful death. Your Product Liability Insurance would cover the legal costs associated with this claim. 

Who is held accountable in a wrongful death claim?

Anyone who was involved in the production and sale of the defective product may be held responsible for the wrongful death of a customer. This often includes:

• Manufacturers
• Designers
• Distributors
• Retailers
• Suppliers
• Advertisers

Accountability can even fall to individuals who assembled the product or professionals who recommend the product. Product liability claims can impact parties all along the supply chain, from creation to final sale.

Example:

• Due to a manufacturing error, the lightbulbs sold at your business are prone to catching on fire. One of your customers dies due to a fire that broke out from this defective lightbulb. You and the manufacturer are both sued for wrongful death.

How can a wrongful death claim impact your business?

One of the largest sources of financial loss in a wrongful death claim will be the major legal costs of defending your business against any lawsuits. If your business is found to be at fault, you will likely be on the hook for both compensatory and punitive damages.

The time and resources involved in a lawsuit could also take a toll on your business. Even if a judgement ends in your favor, you may have spent months or years diverting critical funds and manpower from your core business. 

In addition to legal costs, your business may be viewed negatively by the public following a wrongful death claim, which could have a direct impact on your sales, even if your business is cleared of any wrongdoing. The negative public relations impact on your business can be quite costly to recover from. 

Your business may also need to undergo a costly recall if your product is found to be defective. This can include costs such as removing and disposing of any defective product, making consumers aware of the recall through advertisements or mailed notifications, implementing specialized testing in order to diagnose the product defect, and more. 

Example: 

• Your sporting goods store works with an outside manufacturer to create custom helmets with your logo in the front. Because the helmet was made with insufficient materials, a customer dies after a severe fall from his bike. In addition to the costly legal fees of this wrongful death claim and the high costs to recall these helmets, your business picks up a negative reputation for selling cheap products, and your sales drop significantly. 

How does product liability insurance protect against wrongful death claims?

Product liability insurance financially protects your business from claims resulting from bodily injury, property damage, or financial losses caused by your products. Your product liability policy can cover wrongful death claims and assist in legal expenses such as attorney’s fees, settlement costs, and other court costs.

Product Recall Insurance

Although your product liability insurance covers costs associated with third-party product liability claims, it does not cover the costs of recalling your defective product. Adding product recall insurance to your policy can provide the important financial protection your business needs in such an event.

How do I get product liability insurance?

There are a few options for securing product liability insurance and protecting your business against wrongful death lawsuits, and your options depend on your business’s risk level and needs for coverage. Product liability insurance is typically offered through:

• A general liability insurance policy. There are some minimal levels of product liability coverage provided under the products and completed operations portion of a standard general liability policy, and this may be sufficient for those businesses with low product risk.
• An endorsement to a CGL or business owner’s policy (BOP). Additional product liability coverage may be added to an existing general liability or business owner’s policy.
• A standalone product liability insurance policy. For businesses with a high risk of product liability, it may make sense to purchase a separate policy through an insurer that specializes in product risk.

Below we’ve highlighted a few of our trusted partners who offer product liability coverage in various forms:

Insurer	Product Liability	General Liability	Business Owner's Policy
CoverageSmith	??	??	??
CoverWallet	??	??	??

Final Word 

When a customer is fatally injured by a product produced or sold by your business, you may be held responsible for the wrongful death. It is essential to follow best practices during the design, manufacturing, marketing, and vending of a product to decrease your risk of liability lawsuits. However, if a wrongful death occurs, obtaining adequate product liability insurance is imperative to protecting your business.

This article may feature links to partners who compensate our business, but these partnerships in no way impact our research, recommendations, or advice.