Wednesday, February 15

Product Liability Insurance...Really?


Most inventors have insurance on their cars, their homes, and maybe even their lives. However few inventors even think about insurance on their products.  
Product liability insurance is a fact of life if you expect to commercialize your invention. We don’t plan on things going wrong, but sometimes they do. That's why ALL major retailers require you provide Product Liability Insurance of at least One Million dollars before they will place an order.

By all appearances Spin Master is a reputable company that makes good products and has been in the toy industry for many years.  They likely didn’t intend to hurt a child – but once it happened I’m sure they were glad they had some insurance protection.

Spin Master Inc. of Los Angeles and Spin Master Ltd. of Toronto have agreed to pay a civil penalty of $1.3 million over sale of a toxic toy that put children in comas, the Consumer Product Safety Commission said on Thursday.

The settlement resolves staff allegations that Spin Master failed to report a defect and hazard associated with its Aqua Dots craft kit, the CPSC said in a statement.

The company also "knowingly imported and sold Aqua Dots, which were toxic and a banned hazardous substance, in violation of federal law," the statement said. "In agreeing to the settlement, Spin Master denies CPSC staff allegations that it knowingly violated the law."

Aqua Dots consisted of tiny beads that stuck together when sprayed with water, allowing children to create various shapes and designs.

By mid-October 2007, Spin Master had received reports that children and a dog had been made ill and received emergency medical treatment after ingesting Aqua Dots, the statement said. The CPSC staff also alleged that in the following weeks, Spin Master received more reports about children falling ill.

The company learned on October 18, 2007, that the toy contained 1,4-butylene glycol (TMG), which, upon ingestion, metabolizes to the controlled substance gamma hydroxybutyrate, the statement said. The next day, Spin Master learned that TMG is harmful if swallowed and targets the kidneys and central nervous system.

The CPSC received two reports in November 2007 that children who had swallowed the product had fallen into comas and required hospitalization. The product was recalled that month.

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