What is the difference between product liability and warranty?
When selling or manufacturing products, understanding the difference between product liability and warranty isn’t just good practice — it’s critical for your business survival.
At first glance, they may seem similar. Both involve customer expectations and product performance. But legally and financially, they’re very different beasts.
In this article, we break down everything you need to know — in plain English.
What Is Product Liability?
Product liability is a legal obligation. If your product causes injury, illness, death, or property damage due to a defect, you can be held liable, even if you didn’t intend any harm.
This applies to:
Manufacturers
Distributors
Retailers
There are 3 main types of product defects:
Design Defects – flawed before it’s even made
Manufacturing Defects – something went wrong during production
Marketing Defects – insufficient instructions or warnings
Example:
A blender explodes while in use due to a wiring issue. Even if your warranty expired, the injured person can sue under product liability law.
What Is a Warranty?
A warranty is a promise or guarantee you make to the buyer. It’s either express (written/spoken) or implied (automatic under state laws).
Warranties usually promise that:
The product will work as expected for a set period
You’ll repair or replace defective items
Types of warranties:
Express Warranty – “This vacuum has a 3-year motor warranty.”
Implied Warranty of Merchantability – The product will do what it’s supposed to.
Implied Warranty of Fitness – If the seller knows your specific need, the product must match it.
Example:
A lawnmower doesn’t start two weeks after purchase. The buyer can claim a repair or replacement under warranty — not because they were hurt, but because the product failed too soon.
The Key Differences
| Feature | Product Liability | Warranty |
|---|---|---|
| Legal Basis | Tort Law | Contract Law |
| Triggers | Injury or property damage | Product malfunction/failure |
| Proof Needed | Product was defective and caused harm | Product didn’t meet promised function |
| Time Limits | Varies by state (statute of limitations) | Usually 1–5 years depending on the product |
| Coverage | Includes bodily harm or death | Covers repair/replacement only |
Why You Need Insurance
Even if you offer warranties, you’re not protected against lawsuits for injuries or damages. That’s where product liability insurance comes in.
It helps cover:
Legal defense costs
Settlements or court-ordered payouts
Claims of negligence, strict liability, or breach of warranty
Without it, a single lawsuit could shut down your business.
How THAgency Can Help
At Toby Hansen Agency, we work with nearly 100 insurance carriers to find you the most affordable and comprehensive coverage — from product liability to general business protection.
Whether you’re launching your first product or distributing thousands each month, we can help you protect your business from financial disaster.
Final Thoughts: Know the Difference Before It Costs You
Understanding the difference between product liability and warranty isn’t just smart — it’s essential. While warranties protect the buyer’s expectations, product liability protects people from harm — and you from major legal consequences.
Need help finding the right insurance policy for your product?
Let our experts at THAgency guide you to the right coverage.
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