What Is Product Liability Insurance?
Product Liability Insurance helps protect businesses that manufacture, distribute, import, or sell products if those products are alleged to have caused bodily injury or property damage.
Even if your business didn’t manufacture the product, you may still be named in a lawsuit simply because you sold or distributed it.
Product Liability coverage is often included within a Commercial General Liability policy, but businesses with greater product exposures may need higher limits, specialized coverage, or additional endorsements.
Understanding your product exposure is an important part of building a comprehensive commercial insurance program.
What Does Product Liability Insurance Cover?
Coverage varies by carrier and policy, but Product Liability Insurance may help protect your business against several common types of claims.
Bodily Injury
If a product allegedly causes physical injury to a customer, your policy may help cover legal defense costs, settlements, or judgments if the claim is covered. Examples include:
- Cuts or burns
- Choking hazards
- Allergic reactions
- Equipment injuries
- Product malfunctions
Property Damage
If a product damages someone else’s property after it’s sold, Product Liability Insurance may help pay covered repair or replacement costs.
Legal Defense Costs
Even if your business is ultimately found not responsible, defending a product liability lawsuit can be expensive. Coverage may help pay attorney fees, court costs, expert witnesses, and other covered legal expenses.
Settlements & Judgments
If your business is legally responsible for a covered product liability claim, the policy may help pay settlements or court-awarded damages up to your policy limits.
Who Should Consider Product Liability Insurance?
Any business that manufactures, imports, distributes, or sells products should evaluate its product liability exposure.
Businesses that commonly benefit include:
- Manufacturers
- Wholesalers
- Distributors
- Importers
- Exporters
- E-Commerce Businesses
- Online Retailers
- Retail Stores
- Private Label Brands
- Food Manufacturers
- Consumer Goods Companies
Even businesses that never physically manufacture a product can face liability if they are part of the distribution chain.
Common Product Liability Claims
Defective Product
A customer purchases a household appliance that overheats during normal use, causing a kitchen fire and significant property damage.
Manufacturing Defect
A batch of products leaves the manufacturing facility with a defect that causes injuries after being sold to consumers.
Labeling Error
A packaged food product fails to properly disclose an allergen, resulting in a customer suffering a severe allergic reaction.
Product Malfunction
A piece of commercial equipment fails during normal operation, causing damage to a customer’s business property.
Did You Know?
You don’t have to manufacture a product to be sued.
Wholesalers, distributors, importers, retailers, and even online sellers can be named in product liability lawsuits simply because they were part of the supply chain. Having the right insurance can help protect your business from costly legal expenses and covered claims.
Frequently Asked Questions
Is Product Liability Insurance included with General Liability Insurance?
Many Commercial General Liability policies include Product Liability coverage for completed products and operations. However, businesses with significant product exposures may need higher limits or specialized coverage.
Does Product Liability Insurance cover product recalls?
Generally, no. Product recall expenses are typically excluded unless separate Product Recall Insurance has been purchased.
Can online sellers be sued?
Yes. Businesses selling products through their own websites or online marketplaces may still be named in product liability lawsuits.
Does Product Liability Insurance cover imported products?
It can. Importers often have significant product liability exposure because they may be treated as the manufacturer under certain circumstances.
How much Product Liability Insurance do I need?
The appropriate limits depend on:
- The products you sell
- Annual sales
- Distribution channels
- Customer contracts
- Potential severity of claims
Our advisors can help evaluate your business and recommend appropriate coverage.
Related Commercial Insurance Coverages
Product Liability Insurance is commonly paired with:
Together, these coverages help protect businesses throughout the supply chain.
Why Choose Generazio Associates?
Product liability claims can impact businesses of every size—from small online retailers to large manufacturers.
At Generazio Associates, we help businesses understand where liability exists within their supply chain and recommend insurance solutions designed around the products they manufacture, import, distribute, or sell.
As an independent insurance agency, we compare coverage from multiple commercial insurance carriers to help you find protection that supports your business today and as it grows.
When you work with our team, you’ll receive:
- Access to multiple commercial insurance carriers
- Coverage recommendations tailored to your products
- Assistance reviewing contractual insurance requirements
- Responsive local service
- Experienced commercial insurance advisors
Request a Product Liability Insurance Quote
Whether you manufacture products, distribute inventory, or sell online, Product Liability Insurance can help protect your business from unexpected claims.
Contact Generazio Associates, Inc. today for a complimentary Product Liability Insurance review. We’ll evaluate your current coverage, identify potential gaps, and help you build an insurance program designed to protect your business and your reputation.
