Learn About Product Liability Insurance Coverage and How to Get It


In this blog post we will discuss what product liability insurance is, how it works, and who needs it. We’ll also talk about how to get this type of coverage and why getting it could help save your business from financial ruin due to a lawsuit.

What Is Product Liability Insurance?

Product liability insurance is a type of coverage that provides protection for the manufacturer, seller, and distributor of goods in the event they are sued due to personal injury or property damage. Product liability insurance can be required by law if you sell products directly to consumers.

How Can a Product Liability Lawsuit Affect Your Business?

If your small business sells a product with a design or manufacturing defect or the sale of that product leads to an injury, death or property damage, you may end up on the wrong end of a lawsuit.

Your business could face financial devastation due to the unfavorable judgments awarded by the courts in a lawsuit.

Product liability insurance can help protect your business from the financial consequences of a lawsuit.

The product that you produce or sell may be subject to strict safety standards, but accidents happen and sometimes those products are defective in some way which leads an injury-causing accident with someone else’s property.

What Does Product Liability Insurance Cover?

Product liability insurance helps to protect your business from third-party injury claims from property damage or bodily injury caused by the products you manufacture, distribute or sell to others.

These claims come at the company from multiple angles. Claims that can be made by either manufacturing defects, design defects, or inadequate labeling.

Product liability insurance covers the cost of defending your company in a lawsuit and any settlement or judgment awarded to an injured party.

Who Needs Product Liability Insurance Coverage?

Product liability insurance is essential for product manufacturers, wholesalers, designers and even online retailers such as e-commerce sites selling private labeled products or drop shipping for another company.

It is important to know that a product liability claim could target your business, regardless of where it stands in the distribution chain.

So, if you manufacture, sell or distribute any kind of products like food, children’s toys, electronics, or anything else that could cause harm to the public, you probably need some kind of protection from product liability claims.

How Does Product Liability Insurance Work?

Product liability insurance can help safeguard your business from potential damage or harm that could be caused by a product.

If you are ever faced with the situation of someone claiming injury or loss due to one of your products, then this type of policy will step in and cover any costs associated with these claims.

It covers defense costs, settlement payments or judgments awarded to injured parties if you are found liable for their damages as well any court fees associated with defending against these claims in trial proceedings (should they arise).

What’s The Difference Between Product Liability and General Liability Insurance?

General liability insurance is a type of coverage that can protect you from bodily injury, property damage and other claims from your business.

General liability insurance does not cover the product you are selling. Product Liability Insurance is what your company needs to protect itself from general claims involving bodily injuries and property damage, which can arise in many different ways including faulty products that cause injury or malfunction of a device due to poor design.

A General Liability policy protects your business from general liability claims involving property damage or bodily injuries. This type of policy cannot handle all types of exposures as seen with product liability cases where there may be hundreds involved who could have been injured by one defective vehicle component for example such as brakes on an automobile.

General Liability only covers damages caused by personal negligence so if someone was injured because they were driving recklessly then this would come under “personal” rather than “product.”

While General Liability may protect businesses against cases of bodily injury, it is not designed to provide coverage for liability involving product recalls.

The General Liability policy is a crucial component of everyday business but it does not cover all. A Product Liability policy will be the best protection for companies who want to limit their liability in case something goes wrong with one of their products and someone gets hurt or property is damaged because of that product.

It is strongly encouraged to have both general liability and product liability coverage.

How Much Does Product Liability Insurance Cost?

Product liability insurance is a necessity for many industries. But, how much you spend on coverage can vary based on the type of product or service provided and also which industry your company falls under.

Beyond your industry and the type of products you sell, the size of your company is a factor both in terms of how many employees you have, and your revenue.

The average cost of product liability insurance for small businesses is around $2,500 per year on average but this can be much higher for high-risk products such as firearms, motorcycles, and children’s products.

Where Can You Buy Product Liability Insurance Coverage?

Product liability insurance can be purchased through an independent agent or broker, a captive agency (which is owned by the company), and some major carriers.

It is suggested to only contact the providers whom have an “A” or higher financial strength rating from A.M. Best.

The process of finding coverage will depend on what type of industry your business operates. It is recommended to work with an insurance agency that specializes in your particular vertical.

Most insurance agencies will have you fill out an application for a quote. This application will ask questions about the type of business, products and services sold.

To get product liability insurance, it will be important to fill out an application for a quote. This application asks questions about the type of business you have and what products or services are being sold.

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