General Liability Claims Scenario Part 2

October 18, 2018

Examples of Product Liability and Reputation Damage Claims

The best way to understand how general liability insurance protects small business is to look at examples of this policy in action. You already know that general liability usually helps cover lawyer fees, court expenses, damages to properties belonging to third parties, and immediate medical costs for people injured on your property. You know that general liability covers lawsuits including claims about property damage, bodily injuries, reputation damages, and other common lawsuits. But what does that look like on a day-to day basis for various companies? Here are some examples of product liability and reputation damage claims that may affect your small business.

Product Liability Claims

If your company manufacturers or sells a product, someone could file a claim against alleging that your product is defective and caused injury to them or their property. If you don’t make or sell a physical product but perform work for someone else, someone could claim that the work you completed is faulty and resulted in personal injury or property damages.

  • A sporting goods distributor sells a jungle gym that breaks and injures a customer’s child. The customer sued the company for $500,000 is damages and medical expenses.
  • A fashion designer sells a collection of t-shirts that were manufactured overseas. She was unaware that the manufacturer was not adhering to U.S. flammability standards. A customer who bought one of her shirts is is severely burned in an accident because of this manufacturing defect. The customer sues the fashion designer for $200,000 in personal damages and medical expenses.
  • A customer bought a chair from a company that manufactures ergonomic chairs. He claimed he was sitting in the chair he purchased when it unexpectedly tipped backwards and fell. He sued the company for $25,000 in damages claiming the defective chair caused him to fall and sustain a head injury.
  • A commercial property owner hires a concrete contracting company to construct an elevated walkway at an upscale apartment building they own. Two months after the walkway was constructed, it collapsed and caused extensive damage to expensive statuary as well as several apartment units located by the walkway. The property owner sued for $350,000 for damages caused by the faulty work.
  • A customer weighing 290 pounds buys a chair from a retailer after being assured the chair can withstand up to 500 pounds. When he sits on the chair at home, it collapses and injures him. He sues the furniture for bodily injury alleging a breach of warranty.

Reputation Damage Claims

  • An employee of a software company says something negative about a competitor that may not necessarily be true. This rumor is widely covered by industry trade media and results in backlash on social media toward the competitor. The competitor sues the software company claiming that a case of slander damaged their reputation and cost them potential customers.
  • A pool company places an ad in the local newspaper falsely stating that its competitor sells unsafe pool filters. The competitor filed a defamation claim stating the the pool company caused them to lose customers.
  • A new trending company is interviewed by an online media and news company. The owner is asked what they think of their competitor’s products in the interview. The owner explains how the products differ and how her products are superior in some ways. The competitor comes across the interview and claims their reputation has been harmed and sues the owner that was interviewed.

Reputation Harm. Other businesses may claim that things you say or advertisements you run have harmed their business’s reputation. For example, you’re asked what you think of your competitor’s products in an interview. You give your honest opinion and explain how your products differ and are superior in some ways. The competing business hears this and claims that you’ve harmed their reputation. General Liability Insurance for businesses can help cover the costs of a claim like this.

Running a business is challenging enough without having to worry about lawsuits, product liability claims, or reputation damage and defamation claims. General liability insurance can help cover the costs of various lawsuits including attorney’s fees, court costs and settlements in situations like the examples outlined above. We understand that every business is unique and may need different coverage to suit their needs. At Jessica Liu Insurance Services, we want to give you the peace of mind to focus on running your business. Let us help you find the perfect policy that fits your budget and covers your business’ specific needs. Just give us a call at 415-386-2283 or send us a message at [email protected] to review your current policy or receive a free quote on a new policy!

Want to see more examples of claims? Check out other general liability claims examples below!

Property Damage & Bodily Injury Claims | Product Liability & Reputation Damage Claims | Copyright Infringement & Advertising Injury