Product Liability Insurance
Coverage for businesses that manufacture, distribute, or sell products.
Typical cost: $500 – $10,000+ per year
What Is Product Liability Insurance?
Product liability insurance protects businesses against claims that a product they made, sold, or distributed caused injury or property damage. Even if you didn't manufacture the product, retailers and distributors can be held liable under product liability law.
Three Types of Claims
Product liability claims fall into three categories: manufacturing defects (something went wrong during production), design defects (the product's design is inherently dangerous), and failure to warn (inadequate instructions or safety warnings). All three can result in significant liability.
Who Needs It
Manufacturers, importers, distributors, wholesalers, and retailers all face product liability exposure. Even businesses that only sell products made by others can be sued. Food producers, toy makers, electronics companies, and consumer goods businesses have particularly high exposure.
What's covered
Manufacturing Defects
Covers claims from defects introduced during the manufacturing or production process.
Design Defects
Protects against claims that the product's design is inherently unsafe.
Failure to Warn
Covers claims of inadequate instructions, warnings, or safety labels.
Bodily Injury
Pays for injuries caused by your products to consumers or users.
Property Damage
Covers damage your products cause to other property.
Legal Defense
Pays attorney fees, expert witnesses, and settlement costs.
Pros and cons
Advantages
- Protects against potentially catastrophic product-related claims
- Essential for manufacturers, importers, and retailers
- Covers all three types of product defect claims
- Legal defense included even for groundless suits
- Often included in or added to general liability policies
- Protects supply chain participants, not just manufacturers
Considerations
- Recalls and recall expenses may require separate coverage
- Intentional defects or known hazards excluded
- High-risk products have much higher premiums
- Claims can be complex and expensive to defend
- May not cover contractual liability assumed from suppliers
Frequently asked questions
Related coverage
Bundled coverage combining general liability and commercial property insurance.
Core business protection against third-party bodily injury and property damage claims.
Errors & omissions coverage for professionals providing advice or services.
Required coverage for employee work-related injuries and illnesses.
Vehicle coverage for business-owned cars, trucks, and fleets.
Protection against data breaches, cyberattacks, and digital liability.
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