Product Liability Insurance: A Comprehensive Guide to Policies and Coverage Options


Product liability insurance is an essential form of coverage for businesses in any industry. It helps protect companies from lawsuits related to the products they create and sell, whether it’s a physical item or an intangible service. Without this type of protection, companies are at risk of having to pay costly legal fees if their products cause harm. Knowing what types of product liability insurance policies are available can help you decide which one is right for your business.

According to Sadler & Company, product liability insurance comes in several forms, each with its own set of features and benefits. Depending on the size and scope of your company’s operations, you may opt for a comprehensive policy that covers all aspects of product safety or a more tailored approach that focuses exclusively on specific areas. Whatever your needs, there’s sure to be an option that meets them.

From blanket coverage to specialized policies, there are many ways businesses can protect themselves against potential product-related lawsuits. In this article, we’ll explore the different types of product liability insurance policies available so you can make an informed decision about which one is best for your particular situation.


Product liability insurance is a type of coverage that provides financial protection for businesses in the event they are sued for damages due to their products. It helps cover legal costs, settlements and judgments related to product defects or injuries caused by using the product. It’s important for businesses to understand the different types of product liability insurance policies available so they can choose the right one to meet their needs.

Broadly speaking, there are two main types of product liability insurance: comprehensive and claims-made. Comprehensive product liability insurance covers claims made during and after the policy period, while claims-made policies only provide protection against claims made while the policy is active.

Both types of policies may have additional coverage options such as recall expenses, advertising injury, personal and advertising injury, completed operations and contractual liability. Depending on a business’ needs, these extra coverages can be added onto either type of policy. Ultimately, it’s important for businesses to evaluate their own risk factors in order to select an appropriate policy that meets their needs and budget.

Overview Of Coverage

There are several types of product liability insurance policies available. These policies can usually be tailored to suit specific needs, and they provide coverage for a variety of potential liabilities related to products. The most common type of policy is the Comprehensive General Liability (CGL) policy. This type of policy provides an overall coverage for all potential liabilities that may arise from the use or sale of a particular product.

In addition to CGL policies, there are other types of product liability insurance policies available as well. These include commercial general liability (CGL), manufacturing products liability (MPL), and completed operations coverage (CO). Commercial general liability covers claims arising from bodily injury or property damage caused by the products manufactured or sold by the business. Manufacturing products liability provides coverage for any claims arising from defects in the manufacturing process or design of a particular product. Finally, completed operations coverage provides protection against any claims made after completion of a job related to the manufacture or sale of a product.

Product liability insurance helps protect businesses against legal action resulting from injuries or damages caused by their products. It is important for businesses to have these policies in place so they can protect themselves against potential financial losses due to lawsuits brought on by injured parties.

Negligence Coverage

Negligence coverage is an important type of product liability insurance policy. This type of policy covers claims against a company resulting from any errors, omissions, or negligence in the manufacturing, design, or sale of their products. It can also cover any damage caused by the products themselves. Negligence coverage helps to protect a company’s financial interests in the event of a lawsuit.

This type of policy typically covers damages resulting from breach of contract, misrepresentation, infringement of intellectual property rights, and strict liability claims related to product defects. It also provides protection against punitive damages that may be assessed as part of a judgment against the company.

This type of policy is important for companies selling products because it serves as a safety net should something go wrong with the product or its use by consumers. Without this coverage, companies are at risk for large financial losses due to legal judgments and settlements if they are found liable for damages caused by their products. Negligence coverage helps to minimize that risk and provide peace of mind for manufacturers and retailers alike.

Breach Of Warranty Coverage

Breach of warranty coverage is a type of product liability insurance policy that provides protection for manufacturers who are found to have breached an agreement with a customer regarding the quality or capability of a product. This type of policy covers any damages, legal fees, and other costs associated with the breach of warranty claim. The coverage extends to both implied and expressed warranties, allowing the insured to focus on the production of quality products without fear of financial loss due to a lawsuit.

The most basic form of breach of warranty coverage is a “one-size-fits-all” policy. This type of policy covers all types of warranties that may be included in the sale or purchase agreement between two parties. It is important to note that this type of policy does not protect against claims resulting from intentional misrepresentation or fraud by either party. Therefore, it is important for manufacturers to include additional clauses in their contracts that explicitly outline their responsibilities and liabilities.

It is also essential for manufacturers to understand their obligations under state law when it comes to product warranties. Certain states have more stringent requirements when it comes to warranties, such as offering extended manufacturer warranties on certain products or providing specific remedies if defects are found within a certain time period after purchase. Understanding these requirements can help manufacturers ensure they are properly covered under their breach of warranty policies and avoid costly litigation down the line.

Manufacturers should never underestimate the importance of having adequate breach of warranty coverage in place for their products. Doing so could leave them vulnerable to financial loss due to lawsuits related to defective products or failure to meet promised standards outlined in an agreement between two parties. By understanding the types of policies available and taking into account all relevant state laws, manufactures can ensure they are properly protected from costly litigation related to breach-of-warranty claims.

Strict Liability Coverage

Moving on, strict liability coverage is an important type of product liability insurance policy. It protects businesses from claims related to damages caused by the use of a defective product. This coverage is usually included in the general liability portion of a business’ insurance policy and covers bodily injury, property damage, and other losses that may result from using a defective product.

Strict liability coverage applies regardless of who caused the defect or if the manufacturer was aware of it prior to selling the product. It also applies if the manufacturer took steps to reduce or eliminate any potential risks associated with their product. If a claim is made against a company for damages due to a defective product, this type of insurance can help cover legal costs and settlement fees related to such cases.

This type of insurance is essential for any business that manufactures or sells products, as it offers protection against costly lawsuits and other liabilities that could arise from faulty products. Without this coverage in place, companies are left vulnerable to financial losses should they be held liable for damages resulting from their products. For these reasons, it’s important for businesses to review their existing policies and make sure they have adequate coverage in place for any potential claims related to the use of their products.

Manufacturing Defects Coverage

Manufacturing Defects Coverage is a type of product liability insurance policy that helps protect companies from financial losses that may arise due to the occurrence of defects in their products. This coverage typically covers any costs related to repairing or replacing defective products, as well as any legal costs associated with defending claims resulting from the defect. It also covers any medical expenses and lost wages incurred by consumers who are affected by the defect.

Manufacturing Defects Coverage helps provide a layer of protection for businesses against potential lawsuits that may arise due to the presence of defects in their products. The coverage can also help reduce financial losses in cases where a company must recall or repair a product due to a manufacturing defect. In addition, it can help protect against any third-party claims brought against a company due to injury or property damage caused by a defective product.

This type of product liability insurance policy can provide peace of mind for businesses, knowing they have some measure of protection in the event their products are found to be defective. It can help give companies more confidence when introducing new products, without having to worry about potential financial losses if something goes wrong.

How To Choose The Right Policy

Choosing the right product liability insurance policy is essential for any business. It’s important to understand all of the coverage options and determine the best fit for your particular needs. Here are a few tips to help you make an informed decision.

First, review your current operations and identify potential risks associated with your products or services. This will help you determine which type of coverage is needed and how much coverage you should purchase. Consider whether you need protection against property damage, bodily injury, or both. Additionally, consider whether you need product recall insurance or additional liability protection if a product causes harm to another person or property.

Second, compare quotes from several different insurers and ask questions about their policies and coverage limitations. Make sure the insurer is financially stable and has a history of paying claims in a timely manner. Also, ask about their customer service policies and procedures in case you need to file a claim down the road.

Finally, read all of the fine print before signing on the dotted line. Understand exactly what is covered by each policy so there are no surprises if something goes wrong in the future. Be sure to also check for any exclusions that could leave your business exposed if something unexpected occurs.

Costs And Deductibles

When it comes to the costs and deductibles associated with product liability insurance policies, there are a few key factors to consider. The amount of coverage you need will determine the premium you pay, as well as any deductibles or co-pays that may be required. Additionally, if you have a higher risk product, such as one that is used in hazardous activities or contains hazardous materials, your premiums may be higher than for a product with lower risk.

The cost of your policy will also depend on the type of coverage you choose. If you opt for a comprehensive policy, you will likely pay more than if you purchase only basic coverage. This is because comprehensive policies typically cover more potential risks and provide broader protection than basic policies. On the other hand, if you only need basic coverage, then opting for a less expensive option can help keep your overall costs down.

Finally, it’s important to factor in any additional costs or fees associated with your policy when shopping around for quotes. These can include application fees, broker fees or taxes that may be charged by insurers for certain types of policies. Before committing to a policy, make sure to ask about any additional costs that may apply so that there are no unexpected surprises down the line.

Claims Process

When a product liability insurance policy has been triggered, the claims process begins. It starts with the filing of a claim. It is important for claimants to understand what information needs to be included in their claim, such as the product in question, details about any injuries or damages that have occurred, and any other relevant information. Once the claim is filed, the insurance company will investigate it to determine if the policy covers the incident.

The next step in the claims process is for the insurer to decide whether they accept or deny responsibility for covering the incident. If they accept responsibility they will make an offer of compensation, which may include repair or replacement costs in addition to medical expenses or lost wages due to injury. The claimant then has the option to accept or reject this offer.

If both parties are unable to come to an agreement, then a lawsuit may need to be filed in court. This means that each side will present evidence and arguments before a judge and jury who will ultimately decide if compensation is awarded and how much it should be. In this case, it’s important for both parties to have legal representation from experienced attorneys who can help them navigate this process successfully.

Benefits Of Product Liability Insurance

Product liability insurance provides businesses with a layer of protection in the event that their product causes harm to someone. It helps protect companies from the financial costs associated with potential lawsuits or settlements. The benefits of product liability insurance are numerous, providing peace of mind and financial security in the case of an unforeseen incident.

The first major benefit is that it can help cover legal defense costs if a lawsuit is brought against a business. Legal fees can be astronomical, so having a policy in place to help cover those expenses can be invaluable. In addition, product liability insurance can provide coverage for any damages awarded in a lawsuit or settlement. This includes medical bills and lost wages due to injury caused by the product.

Another great benefit is that product liability insurance covers more than just physical injuries caused by a product; it also covers property damage, personal injury, and advertising injury expenses as well. This means if someone claims your business has infringed upon their intellectual property rights, you’ll have coverage for any legal costs associated with defending yourself against such accusations.

Product liability insurance provides businesses with much-needed peace of mind when it comes to protecting themselves from potential legal issues due to their products or services. Not only does it provide coverage for legal fees and potential settlements or awards, but it also covers other losses related to an unexpected incident involving one’s products or services.

Frequently Asked Questions

How Much Coverage Do I Need?

When it comes to product liability insurance, one of the most important questions you should ask is how much coverage do I need? The amount of coverage you need depends on several factors, such as the type of products you manufacture or sell, the potential risks associated with those products, and the size and scope of your business.

The most basic type of product liability insurance covers bodily injury or property damage resulting from a defective product. Depending on your needs, you may also want to consider additional coverages for advertising claims, losses due to recalls, and defense costs associated with lawsuits stemming from a defective product. If your business manufactures or sells higher-risk products such as medical devices or electronics, you may want to look into specialized policies that provide additional coverage for those types of products.

It is ultimately up to you to decide what level of coverage best fits your needs. It is important to evaluate all the potential risks associated with your products and consult an experienced insurance professional if necessary. They can help ensure that you have enough coverage in place to protect yourself in case something goes wrong. Doing so can save you both time and money in the long run by providing peace of mind knowing that your business is adequately covered against potential liabilities.

Can I Get A Policy To Cover A Specific Product Or Product Line?

When considering the type of product liability insurance policy to purchase, it’s important to know whether you can get a policy for a specific product or product line. This is particularly important for businesses that manufacture and sell multiple products.

Having a policy that covers a specific product or product line allows businesses to limit their risk exposure from any one particular item. This kind of coverage is especially useful for businesses with potentially dangerous products, such as toys and cosmetics. It also provides protection if there are any legal claims as a result of an injury caused by the product.

Product liability policies vary in how much coverage they provide, but typically they cover all costs associated with defending against any legal claims and damages awarded in court if the business is found liable. They may also cover medical expenses incurred by the injured party, as well as lost wages if they are unable to work due to their injury. It’s important to make sure you have enough coverage for your particular business needs, so be sure to speak with an experienced insurance agent who can help you determine what level of protection is right for you.

Are There Any Exclusions To The Product Liability Insurance Policy?

When it comes to product liability insurance policies, there are certain exclusions that need to be taken into account. These exclusions can vary depending on the type of policy and the provider. It is important for consumers to understand what is and isn’t covered in order to make sure that they are adequately protected. In this article, we will look at some of the common exclusions associated with product liability insurance policies.

One of the most common exclusions is for intentional misconduct. If a company deliberately acts in a way that endangers their customers, then this will not be covered by any product liability insurance policy. Similarly, if a manufacturer does not adhere to relevant safety standards or fails to provide adequate warnings about products, this will also not be covered by any policy. In addition, if someone uses a product in an inappropriate manner or fails to follow instructions correctly, this could also lead to coverage being denied.

Another exclusion relates to pre-existing conditions or faults with products that existed before they were purchased or used by customers. Although some policies may cover repairs and replacements in these situations, it is important to check with your provider as these types of claims may not always be accepted. Finally, many product liability insurance policies will not cover claims made against companies who are considered negligent due to failing to properly maintain their products or take necessary safety precautions.

It is therefore essential for anyone looking into getting a product liability insurance policy to familiarize themselves with all of the terms and conditions before signing up for coverage. This will ensure that they have an accurate understanding of exactly what is and isn’t covered so that they can make an informed decision about what type of protection best suits their needs.

Does The Policy Cover The Cost Of Legal Fees?

When it comes to product liability insurance policies, one important question that needs to be asked is whether or not the policy covers the costs of legal fees. This can be a major factor in determining which policy is best for an individual’s or business’s needs.

The short answer is that most policies do provide some coverage for legal fees associated with defending against claims of product liability. Depending on the type of policy, this coverage may include all or only some legal costs related to product liability claims. It’s important to read the details of any policy carefully so that you understand exactly what types of expenses are covered by your policy and what is excluded from coverage.

In addition to understanding what types of expenses are covered by your policy, it’s also important to consider who will be responsible for paying any legal fees associated with a claim. Generally speaking, many policies will require the insured party (the individual or business holding the insurance) to pay a certain amount before the insurer will cover any additional costs related to legal fees. This means that even if your insurance does provide some coverage for legal fees, you could still end up having to pay out-of-pocket for part of the cost.

It’s therefore essential to consider how much of a financial burden any potential legal fees would place on you when shopping around for product liability insurance policies. Understanding how much and what type of coverage your selected policy provides will help ensure that you have adequate protection and peace of mind should you ever need to rely on it.

Is There A Time Limit On When I Can Make A Claim?

When making a claim for product liability insurance, one of the key questions to ask is whether there is a time limit on when you can make the claim. It’s important to be aware of any deadlines that may be in place as this could impact your ability to receive compensation. Understanding the policy’s time limits and restrictions is an essential part of choosing the right coverage for your needs.

Time limits on claims vary depending on the type of policy and other factors, such as where you live. Generally speaking, most policies have some kind of limitation period in which you must file a claim or it will no longer be valid. This could range from several days, weeks, or months depending on your individual policy. In addition to this, some policies also have different requirements for filing claims based on whether they are made in-person or online.

It’s important to review all aspects of the policy before signing up, including any time limits and restrictions that may be in place for filing claims. If you have any questions about these details, contact your insurer directly for more information about what applies to your specific policy. Knowing what kind of time frame you’re working with will help ensure that you don’t miss out on receiving compensation if something goes wrong with a product down the line.

Ultimately, having an understanding of how long you have to make a claim can give you peace of mind when making a purchase knowing that should something go wrong; you’ll still be covered by your insurance policy and able to obtain any necessary compensation within the allotted timeframe.


In conclusion, it’s important to understand the types of product liability insurance policies available and how they can protect your business. It’s also a good idea to review your policy regularly to make sure you have the right coverage for your needs.

When looking at a policy, it’s important to consider how much coverage you need, if there are any exclusions, and if it covers legal fees. Knowing this information ahead of time will help you make sure you’re covered in case of any unfortunate events.

Overall, having product liability insurance is an essential part of protecting your business and ensuring that you get the best protection possible. By taking the time to research and compare policies, you can get the coverage that fits your business’s needs and keep yourself protected against potential losses.

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