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What Is Product Liability Insurance?
Product liability insurance helps protect your business from claims that a product you made or sold caused bodily injury or property damage to someone else’s belongings.1 An insurance company may offer this coverage as a standalone policy, but we include it as part of your general liability insurance.
Without product liability coverage, your business could have to pay out of pocket for costly types of general liability claims related to product defects.
Why Is Product Liability Insurance for Small Businesses Important?
If your business sells products to customers, you could be at risk of a defect causing injuries or damage to someone else’s property. For example, let’s say a customer buys a power tool that your business manufactures. A defect in the tool ends up injuring the customer, and they sue your business. Your general liability insurance policy’s product liability insurance helps cover:
- The customer’s medical costs to treat their injury
- Legal fees and costs to defend your business
- Settlements or judgments made against your business
Without this coverage, you’d have to pay for these costs out of pocket. Not every business has the resources to cover product liability lawsuits.
Who Needs Product Liability Insurance?
If you sell products to customers or clients, or if you have a supply chain, having product liability insurance can be helpful. Whether it’s small businesses or larger companies, many industries can benefit from this coverage, such as:
An issue at any stage of production can lead to defects that can put your business at risk of a product liability claim. That’s why it’s important to help protect your business with the right type of insurance.
What Does Product Liability Insurance Cover?
If you have a general liability insurance policy, it can help cover product liability claims related to:
- Design defects that existed before the product was made.
- Manufacturing defects that occur while the product gets made.
- Strict liability, which means a customer gets hurt by a manufacturers’ product, even if the business owner isn’t found negligent.
- Improper warning, which can happen if a business owner doesn’t give a customer enough warning on proper use of a product.
Be aware that product liability insurance isn’t the same as product recall insurance. You’d have to buy an endorsement for your business insurance policy to cover product recalls.
How Much Does Product Liability Insurance Cost?
We offer product liability insurance as part of your general liability insurance policy. Product liability insurance costs vary between business owners. Some factors that can impact your price include your:
- Claims history
- Policy limits
The best way to find your business’ cost is to get a general liability insurance quote. Our specialists can answer your questions and help you get the coverage your business needs.
Last Updated: December 6, 2023
1 Product liability insurance coverage may not be available to all classes.
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