Product Liability & Wrongful Death: A Small Business Primer
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Businesses may find themselves in a wrongful death lawsuit if a product they make or sell leads to someone's death. An overlooked product flaw could lead to a devastating tragedy, a PR nightmare, and a stack of legal bills.

We've compiled a primer on what small businesses need to know about risks related to product injuries and wrongful death suits.

What Is a Wrongful Death?

Let's start with a wrongful death definition. As the name suggests, a wrongful death lawsuit occurs when someone dies because something has gone wrong. This could mean a few things:

  • A product hasn't worked properly.
  • Inadequate safety warnings led someone to misuse a product.
  • An accident you simply couldn't have foreseen led to a tragedy.

Whatever the cause, ultimately, a wrongful death means that product liability could fall on any number of involved parties, including…

  • Manufacturers.
  • Retailers.
  • Suppliers.

In short, anyone in the supply chain could potentially be sued.

For instance, in 1972, Lilly Gray was killed when her Ford Pinto was rear-ended by another car traveling 30 miles per hour. The Pinto had a design flaw. The gas tank was in the rear of the car would puncture and explode when the car was struck from behind.

In this case, the manufacturer, Ford, was sued because of the design flaw (the case cost Ford around $4 million dollars). But it's not just manufacturers that have wrongful death liability risk.

Say a tainted vitamin supplement leads to a wrongful death. The maker of the vitamin can be sued, but so can the supplement store, the dietitian who recommended it, and any supplier who may have given the manufacturer tainted vitamins.

What Can You Be Sued for in a Wrongful Death Lawsuit?

In a wrongful death lawsuit, there are three types of damage you can be sued for:

  • Economic damages. If family members of the deceased stand to lose a portion of their financial security, they can sue for that loss. For example, if a parent dies, his children could sue for the loss of their parent's income.
  • Non-economic damages. In a wrongful death lawsuit, survivors can sue for pain and suffering, emotional distress, and missed future enjoyments. Spouses could sue for grief as well as loss of the life they had planned with their significant other.
  • Punitive damages. If a court feels the manufacturer (or other party) was especially reckless, it can levy "punitive damages," which punish the party at fault by making it pay more. In the Ford case, it had to pay $3.5 million in punitive damages to the court.

Does Product Liability Insurance Cover Wrongful Death Suits?

Product Liability Insurance (included with General Liability Insurance) may cover wrongful death lawsuits. When a flaw in your product leads to customer injury or wrongful death, Product Liability Insurance can help pay for:

  • Attorney fees.
  • Economic and non-economic damages.
  • Punitive damages.
  • Settlement costs.
  • Expert witness fees.
  • Miscellaneous court costs.

No matter where you are on the supply chain, Product Liability Insurance can offer key protection for small-business owners.

Check out our resources on the cost of General Liability Insurance for more information on protecting your business.

Product Liability Insurance: Further Reading