Coverage Guide
Product Liability Insurance
If you make, sell, or distribute products — you're exposed.
Product liability insurance protects your business from claims that a product you manufactured, distributed, or sold caused injury or property damage to a consumer. It covers legal defense, settlements, and judgments — even if the defect originated with a supplier or manufacturer.
What It Covers.
Manufacturing Defects
The Risk
A product leaves your facility with a flaw that causes injury. A batch of supplements is contaminated, or a power tool has a faulty safety switch.
The Solution
Product liability covers claims arising from defects introduced during the manufacturing process, including legal defense and damages.
Design Defects
The Risk
A product is manufactured correctly but its design is inherently dangerous. A children's toy has small parts that pose a choking hazard.
The Solution
Coverage protects against claims that the product's design made it unreasonably dangerous, even if it was built to specification.
Failure to Warn
The Risk
A consumer is injured because your product lacked adequate warnings or instructions. A cleaning chemical causes burns because the label didn't specify proper ventilation.
The Solution
Product liability covers claims that inadequate labeling, warnings, or instructions contributed to the injury.
Who Needs This?
Any business in the product supply chain — manufacturers, distributors, wholesalers, and retailers. If a product passes through your hands, you can be held liable.
- Manufacturers of consumer goods
- Food producers and processors
- Retailers and e-commerce sellers
- Importers and distributors
What Happens Without It?
Scenario
A customer is hospitalized after an allergic reaction to a food product you manufactured. They sue for $500,000 in medical bills and pain and suffering.
Consequence
Product liability lawsuits are among the most expensive in commercial insurance. Without coverage, a single claim can exceed your business's total assets.
Real-World Example.
Situation
A small electronics company sells a phone charger that overheats and damages a customer's laptop. The customer sues for the cost of the laptop plus consequential damages.
Outcome With Coverage
Product liability insurance covers the legal defense, the laptop replacement, and the settlement — preventing a $50,000 loss from becoming a business-ending event.
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Related Coverages.
Often paired with Product Liability for comprehensive protection.