The following entities need General Liability Insurance including Products Liability to protect against lawsuits: Manufacturers, distributors, reconditioners or rebuilders, lessors, successor corporations and even employers can be held responsible when a product causes injury.
Manufacturers are required by law to ensure that their products are reasonably fit, suitable and safe for their designed purpose. Also, the manufacturer may be liable even if its product was altered or misused, if the alteration or misuse is deemed as reasonably foreseeable (when a product’s use or change could, and should, be reasonably expected and guarded against).
A distributor can be held liable because in a strict liability action, liability can be extended to everybody in the chain of distribution. Particularly when the manufacturer is foreign and is not subject to U.S. laws, the distributor becomes next in line for all potential claims. When considering strict liability, the courts typically view the injured parties as more innocent than the distributor or retailer and less in a position to protect themselves.
The reconditioner or rebuilder of a product or component part has a duty similar to that of a manufacturer. If the rebuilder or reconditioner fails to incorporate a safety device, when feasible, the rebuilt machine or component part will be deemed a defective product and the rebuilder or reconditioner will be viewed by the courts the same as a manufacturer of a defective product or part.
Lessors of products are subject to products liability claims because the lease agreement contains an implied warranty that the leased products are fit for use throughout the duration of the lease.
When a successor corporation purchases the assets and liabilities from another corporation and undertakes the same manufacturing operations as the selling corporation, the purchasing or successor corporation is strictly liable for injuries caused by defects in units of the same product line, even if the product or component was previously manufactured and distributed by the selling corporation or its predecessor.
In rare instances, employers can be sued by their employees for product injuries. However, typically, this can only happen when there is a third party indemnity agreement in place. When there is a third party agreement in place, it is possible for employees to circumvent The Workers Compensation Act and sue their employers for products liability.