Lawsuits can reach astronomical figures. Philip Morris was once ordered to pay $28 billion (later reduced to $28 million), and General Motors paid $150 million to settle a class-action lawsuit. How to Buy: The Process Product Liability Insurance
A small business sold handmade pet toys at a craft fair, only to realize afterward that they lacked both an LLC and insurance. They faced the terrifying possibility that a single accident with one of those 50 toys could lead to a million-dollar lawsuit.
Most businesses start by viewing product liability as just another bill until a scenario like these occurs:
Buying product liability insurance is often a "long story" because it moves from a simple checkbox for business owners to a high-stakes legal shield that can determine whether a company survives a single mistake. The "Why": When Reality Hits
Importers often assume foreign manufacturers are responsible for defects. However, under U.S. law, importers are treated as the manufacturer . Since U.S. courts rarely have jurisdiction over foreign companies (like those in China), the importer's insurance becomes the primary defense against claims like malfunctioning car parts or medical emergencies from supplements.