Protect Your Business with Product Liability Insurance

Product liability insurance is a type of business insurance that helps protect companies from financial losses if a product they manufacture, distribute, or sell causes injury, property damage, or illness. Products can fail due to defects, poor design, inadequate instructions, or unusual use, and product liability insurance helps cover legal defense costs and claims that result from such incidents.

This coverage is especially important for businesses that place products into the hands of consumers or other businesses.

What Is Product Liability Insurance?

Product liability insurance provides financial protection when a product connected to your business causes harm. This coverage helps pay for legal defense, settlements, judgments, and related costs if someone sues your business because of injury or damage linked to a product you manufactured, sold, or supplied.

Without this protection, product claims could jeopardize your business’s financial stability.

Who Needs Product Liability Insurance?

Product liability insurance is important for businesses such as:

• Manufacturers who make physical products

• Wholesalers who distribute products to retailers

• Retailers who sell products to consumers

• E-commerce sellers who ship goods directly

• Importers who bring products into the market

If your business’s products enter commerce and reach end users, this coverage helps protect your bottom line from claims.

What Product Liability Insurance Covers

Product liability insurance typically helps cover:

• Bodily Injury Claims: When your product injures someone

• Property Damage Claims: When your product damages someone’s property

• Legal Defense Costs: Attorney fees, court costs, and defense expenses

• Settlement and Judgment Costs: Payments made to claimants up to the policy limit

Coverage applies to damages arising from normal use and reasonably foreseeable misuse of products.

What Product Liability Insurance Does Not Cover

Typical exclusions may include:

• Intentional wrongdoing or fraud

• Contract disputes unrelated to product harm

• Damage to your own products or inventory

• Known defects not disclosed prior to sale

• Warranty or guarantee costs

Understanding exclusions helps you avoid gaps in protection.

Why Product Liability Insurance Is Important

Even well-designed products can malfunction or be misused, leading to claims that result in:

• Lengthy and costly lawsuits

• Legal defense expenses

• Settlement awards and judgments

• Damage to your business’s reputation

• Financial strain or business interruption

Product liability insurance helps businesses absorb the financial impact of these risks and continue operating.

How Much Product Liability Insurance Costs

Costs depend on factors such as:

• Type of products you sell

• Revenue and sales volume

• Industry risk profile

• Claims history

• Coverage limits and deductibles

Comparing quotes from multiple carriers helps you find the best value based on your risk exposure and budget.

How to Choose the Right Coverage

To choose suitable product liability insurance:

1. Identify all products your business sells, supplies, or manufactures

2. Assess the potential risk tied to product use

3. Choose coverage limits based on your exposure and sales volume

4. Review exclusions and optional endorsements carefully

5. Update coverage as your product lines evolve

Proper planning ensures you aren’t left exposed if a claim arises.

Frequently Asked Questions

What is product liability insurance?
Product liability insurance protects businesses from financial losses if their products cause injury or damage.

Who needs product liability insurance?
Businesses that manufacture, distribute, sell, or import physical products that reach consumers or other businesses.

Does product liability insurance cover legal defense costs?
Yes, it typically helps cover attorney fees, court costs, and defense expenses.

Will this insurance pay settlements and judgments?
Yes, product liability insurance usually helps pay settlements and judgments up to the policy limit.

Does it cover defective parts in products?
Yes, it can cover bodily injury or property damage claims caused by defective parts in a finished product.

Is product liability insurance expensive?
Cost varies based on product risk, revenue, industry claims history, and selected coverage limits.

Final

Product liability claims can occur even when products are well designed and properly manufactured. The financial consequences of these claims can be severe without the right protection. With over 30 years of experience, we help businesses secure the right product liability insurance by comparing options from nearly 100 carriers to find the coverage that fits your needs.

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