Product Liability Insurance Policy Information

Product Liability Insurance. This insurance is crucial when you run a business. When a claim is made against your company because of a problem with your product, having this type of insurance keeps you protected. Product liability is a must to keep your business covered if bodily injury or property damage occurs as a result of the use of your product.
Covering your business with this type of insurance is important and can save you millions of dollars if you are sued. If your product causes damage to a buyer or a third party you are covered having this product liability insurance for your business.
When you run a business there are a wide range of risks that you need to be aware of that could potentially turn into a problematic legal situation. By being proactive and finding a solid product liability insurance policy from a reputable company, you can help to protect your business from future lawsuits.
Product liability insurance protects your business from lawsuits with rates as low as $107/mo. Get a fast quote and your certificate of insurance now.
Below are some answers to commonly asked product liability insurance questions:
- What Is Product Liability Insurance?
- How Much Does Product Liability Insurance Cost?
- Why Do Businesses Need Product Liability Insurance??
- Why Do Wholesalers And Retailers Need You Need Product Liability Insurance?
- What Does Product Liability Insurance Cover & Pay For?
What Is Product Liability Insurance?
Product liability insurance is a type of insurance coverage that provides protection to a manufacturer or seller of a product against claims made by customers or third parties who have been injured or suffered damage as a result of a defective or faulty product. This type of insurance covers the cost of defending a lawsuit, paying settlements or damages, and any associated legal fees. It is designed to protect a company from financial loss if it is found liable for producing, selling, or distributing a product that causes harm to a customer or other third party.
How Much Does Product Liability Insurance Cost?
The average price of a standard $1,000,000/$2,000,000 Product Liability Insurance policy for small businesses ranges from $107 to $169 per month based on location, products sold, payroll, sales and experience.
The more hazardous the product made by your company, the more expensive it is to get insurance. However the lower the hazard risk of your product the less money you'll have to pay. When getting this type of insurance, your insurer will categorize your business and assign a class code.
Why Do Businesses Need Product Liability Insurance?
When your business is sued, you may have to pay for the expenses that occur as a result of using your product. Whether it is medical expenses, loss of income or pain and suffering your business may have to pay.
Lawsuits against your business can cost you lots of money, and having the right product liability insurance coverage is the way to keep your business protected when it does.
Design Defect Claim - A design defect claim is when a person who bought your product claims that the product is unsafe because of a defect in its design. Once a person believes they were injured because of a defect in your product they can sue your company.
Manufacturing or Production Flaw - A person that buys your product and is injured could claim that during the process of producing the product a defect was created. Probably the person who bought the product is injured while using the product if so they could make this claim against your business.
Product Warnings And Instructions - If a person feels that they were injured by your product because you did not have enough warnings or instructions, then they could make this claim against your company. The claimant says that because of the lack of instruction they were injured while using your product and decided to sue your business.
Why Do Wholesalers And Retailers Need You Need Product Liability Insurance?

Most of the lawsuits that happen may fall on the manufacturer of the product, but there may be times when the suit could fall on the product seller as well. Typically if the seller directly imported the product from outside the USA, or if you white or private label or alter the product in any way.
In a case like this, it is always a good idea as a vendor to have product liability insurance protection for your business. Product sellers include wholesalers, retailers, distributors, and resellers.
Once you are involved in the process of selling the product you need to have this protection for your business.
If a seller helps to market a product to a buyer and that buyer is injured, that seller could be held liable. If the seller has to pay for the damaged caused to a buyer then the seller could turn around to sue the manufacturer to make up for the losses from the lawsuit.
If a buyer can prove that the product manufactured contains a defect, injures the buyer or the injury occurred while the buyer was using the product then the buyer may win a product liability lawsuit. In a case like this, the seller or the manufacturer can be sued in the absence of negligence.
What Does Product Liability Insurance Cover & Pay For?

Following are some examples of product liability claims and how insurance helps to pay:
Example 1: Manufacturing Defect
A customer buys a new electric kettle from a retailer. Unfortunately, due to a manufacturing defect, the kettle overheats and causes a fire, resulting in significant property damage and personal injury to the customer. The customer then sues the manufacturer for the damages.
How Product Liability Insurance Helps:
Product Liability Insurance can help in such a situation by covering the legal costs associated with the lawsuit, including attorney fees, court costs, and any settlements or judgments that might be awarded to the plaintiff. The insurance can also cover medical costs if the claim includes bodily injury.
Example 2: Design Defect
A company designs and manufactures a high-end bike. However, due to a flaw in the design, the bike's brakes fail to work properly at high speeds, resulting in a rider's severe injury. The rider sues the company for his medical expenses, lost wages, and pain and suffering.
How Product Liability Insurance Helps:
In this case, Product Liability Insurance can cover the costs associated with the lawsuit, including the legal defense costs and potential settlement or judgment. This could include compensation for the rider's medical expenses, lost wages, and damages for pain and suffering. Without insurance, the company might have to pay these costs out of pocket, which could significantly impact its financial stability.
Example 3: Failure to Warn
A pharmaceutical company manufactures a drug that, while effective, can cause severe side effects if taken with certain other medications. The company fails to include this information on the drug's label. A patient who is prescribed the drug along with one of the contraindicated medications suffers a severe reaction and sues the company for damages.
How Product Liability Insurance Helps:
In such a case, Product Liability Insurance could cover the costs of legal defense, any medical expenses the plaintiff incurred due to the reaction, and any settlement or judgment awarded. The insurance could also cover public relations expenses if the lawsuit results in negative publicity for the company, damaging its reputation.
Product Liability Insurance - The Bottom Line
When you make products and people buy these products, there is always the chance that your business could be sued because of these products. Having product liability insurance protects you in cases where your company is sued because of your product.
You may have a business that manufactures a hazardous product, because of this, it may be harder for you to get product liability insurance. Using a specialty insurer can help you to get this type of insurance. Using a surplus lines broker helps you to find this kind of insurer.
Speaking with an experienced insurance agent can help you to find the right insurance for your business. Taking the time to find the right insurance for your company and can save your business from financial ruin if you are ever sued in the future.
Additional Resources For Manufacturing Insurance
Learn all about manufacturing insurance. Manufacturers face many unique risks such as product libility and/or product recall exposures due to the nature of their business operations.
- 3D Printing
- Adhesives
- Alarms
- Audio & Video Equipment
- Auto Parts
- Bottling Plants
- Boxes
- Bricks
- Brooms & Brushes
- Buttons
- Cabinets
- Camping Equipment
- Canned Fruit & Vegetables
- Cans
- Canvas Products
- Caskets
- CBD Oil And Hemp
- Cement
- Ceramics
- Chemical
- Clock & Watch
- Clothing
- Coffee
- Commercial Air Conditioning
- Commercial Electronics
- Communications Equipment
- Computers
- Condoms
- Construction Equipment
- Cork Products
- Cosmetics
- Cutlery
- Dairies & Creameries
- Down And Feather Products
- Dry Ice
- Dyes & Pigments
- Electronic Toys & Games
- Electroplating
- Elevators
- Engines
- Exercise Equipment
- Farm Equipment
- Feed & Grain
- Fences
- Fertilizer
- Fireworks
- Flavoring Extracts
- Frozen Foods
- Fruit Juice
- Fur Garment
- Garage Door
- Gears
- Glass
- Glasswear
- Gypsum Products
- Hosiery
- Ice Cream
- Industrial Equipment
- Ink
- Insecticides
- Iron & Steel Foundries
- Jewelry
- Lawn Mowers
- Leather Apparel
- Leather Goods
- Lighting & Wiring
- Lumber & Wood Products
- Machine Shop
- Major Electrical Appliances
- Manufacturing
- Marijuana Products
- Mattresses & Box Springs
- Metal & Plastic Furniture
- Metal Heat Treating
- Metal Toys
- Millwork
- Monuments
- Musical Instruments
- Nanotechnology
- Nonferrous Foundries
- Ornamental Metalwork
- Paint
- Paper & Allied Products
- Pesticides
- Pet Food
- Pharmaceuticals
- Plastic & Rubber Toys
- Plastic Goods
- Plastics
- Plastics Molding, Forming & Extruding
- Pottery
- Product Liability
- Prosthetics
- Psychedelic Drugs
- Pulp & Paper Mills
- Refractory
- Residential Air Conditioning & Heating
- Rubber Goods
- Rugs
- Sawmills & Planing Mills
- Screw Machine Products
- Sheet Metal
- Soap & Detergent
- Shoes
- Small Electrical Appliances
- Sporting Goods
- Springs
- Stone Products
- Tanneries
- Textiles
- Textiles Finishing & Coating
- Tires
- Tobacco
- Tool & Die Shops
- Vegetable Juice
- Vending Machines
- Watercraft
- Wire
- Wire Rope
- Wood Furniture
- Woodworking
- Writing Instruments
- Yarn
- Specialty Manufacturing
- Specialty Product Liability

The manufacturing industry is a vital part of the economy and plays a significant role in the production of goods and services. However, it is also an industry that is prone to risks and accidents, which can result in costly damages and lawsuits. Therefore, it is essential for businesses in the manufacturing industry to have insurance to protect them against potential losses.
Business insurance can cover a wide range of risks, including property damage, liability, and worker injuries. For instance, if a fire were to break out in a manufacturing facility and destroy equipment or inventory, commercial insurance could cover the costs of replacing or repairing the damages. Similarly, if a worker were to be injured on the job, business insurance could cover medical expenses and lost wages.
In addition to protecting against physical damages, insurance can also provide financial protection against legal liabilities. If a customer were to sue a manufacturing business for a faulty product, the commercial insurance could cover the costs of legal fees and settlements.
Overall, insurance is essential for the manufacturing industry as it helps to mitigate risks and protect against unexpected costs. Without it, businesses in the industry could face financial ruin in the event of an accident or lawsuit.
Minimum recommended small business insurance coverage: Building, Business Personal Property, Business Income with Extra Expense, Equipment Breakdown, Employee Dishonesty, Accounts Receivable, Computers, Goods in Transit, Valuable Papers and Records, General Liability, Employee Benefits Liability, Environmental Impairment Liability, Umbrella Liability, Hired and Non-owned Auto Liability & Workers Compensation.
Other commercial insurance policies to consider: Earthquake, Flood, Cyber Liability, Employment-related Practices Liability, Business Auto Liability and Physical Damage and Stop Gap Liability.