Tuesday, November 15, 2016

Bo's bLAWg - Product Liability Insurance: What you should know

MJ Bogatin (“Bo”) of Bogatin, Corman & Gold, is an Arts and Entertainment Attorney in San Francisco.  He is also Co-President of California Lawyers for the Arts. www.calawyersforthearts.org.  Bo is available to answer some of your questions surrounding the business of Art Licensing. - THANKS BO!

What is product liability insurance and do I need it?  Thanx.  Liz

Thanks for your question, Liz.  Way back in my first Illustrators’ bLAWg, I addressed critical issues in a manufacturing license.  Product Liability Insurance was one of the more esoteric issues that I did not mention in that bLAWg. http://annietroe.blogspot.com/2015/02/bos-blawg-what-should-be-in-art.html

Product liability insurance is protection against claims of injury associated with a manufactured product.  It is usually purchased by the manufacturer to cover claims that someone has suffered damages on account of some dangerous condition or flaw in the product that has caused injury in the course of use of the item.  The short answer to your question, Liz, is “No, you do not need to obtain product liability insurance for yourself unless You are manufacturing products.”
Nowadays, more and more artists are arranging for manufacture of their own product lines and offering them wholesale or retail.  To the extent that an artist is putting herself in the vertical line of sales, it would certainly be prudent to have product liability insurance coverage.  Ideally, however, this is not something the artist should have to purchase for herself, but coverage she could obtain by and through the manufacturer.  Because product liability insurance is a normal business expense of all manufacturers, it is fairly standard for people who make individual contributions to the product being manufactured have the manufacturer make them an “Additional Insured” to the manufacturer’s policy.  However, if the manufacturing has taken place in China or some country where the artist cannot rely on Additional Insured coverage to be provided by such manufacturer,  (or an intermediary “packager” or distributor), then she may do well to obtain her own coverage if the product involved carries any risk of consumer injury.

While it is hard to imagine how an illustrator who licenses an image for use in a given product might ever be personally liable for a product liability claim, it is not unheard of for the illustrator to be named in a product liability complaint.  Since product liability insurance includes legal defense representation, being an Additional Insured on the manufacturer’s coverage is an important consideration.  The manufacturer can most likely have contributors like an artist added without charge, but having the coverage name you are the artist can be invaluable.
Obviously, the artist would not typically be legally responsible for the harm done by the product.  Because a mug with your illustration was poorly made and had a tendency to shatter and cause injury, the artist would not be found liable even if they were sued.  The only situation in which an artist client of mine has had to defend, is when a Chinese-manufactured puzzle had been printed with ink that turned out to be the cause of a child’s illness.  She had nothing to do with the choice of ink used on the puzzle, and was in short order dismissed from the action by the manufacturer’s insurance defense lawyers.  But being named as an Additional Insured gave her a right to rely upon the coverage, without first having to claim against the manufacturer to defend and indemnify her.  Were that tender not accepted, in the absence of the coverage, the artist might be out-of-pocket to defend, even if they were not liable for the claimant’s damages.

But what if it was the artist who had arranged for the Chinese-publication on behalf of the manufacturer?  The product liability coverage could be a financial ‘life-saver.’  The lessons learned were:  have product liability coverage in place just in case, and don’t let your child eat puzzle pieces. 

Disclaimer: The information contained in this website is not intended as legal advice. Because the law is not static, and one situation may differ from the next, we cannot assume responsibility for any actions taken based on information contained herein. Also, be aware that the law may vary from state. Therefore, this website cannot replace the advice of an experienced attorney. Receipt of this information does not create an attorney-client relationship. MJ Bogatin, Bogatin, Corman & Gold, www.bcgattorneys.com© 2016 mjbogatin

Have a legal question? email it to info@AnnGraphics.com. I will forward it to Bo. It might be a blog post! You can search "Bo's bLAWg" to read more posts. I am looking forward to your comments and thanks for sharing this great information on social media.


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