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Product Liability Insurance
Get protection from lawsuits related to products you sold or made.
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Product liability insurance
Product liability insurance
Product liability insurance can help cover your legal expenses if someone claims that a product you sold, made, or distributed caused an injury or property damage.
Does your small business need product liability insurance?
If you sell, make, or distribute products, you likely need this policy.
If that product allegedly hurts someone or damages their property, product liability coverage will help pay your legal fees, judgment, or settlement. Anyone can sue over damage from a product, even if they didn’t buy it or use it.
A product liability policy is also crucial for construction and contracting businesses. It offers financial protection when a client sues over a personal injury or property damage related to your completed work.
Do you still need product liability coverage even if your business does nothing wrong?
Yes, for several reasons.
First, your business might be unaware it sold a defective product. Anyone involved in a product’s supply chain can face a lawsuit if that product causes harm or financial losses.
Second, a customer might also claim your business provided insufficient warnings or inaccurate instructions. If they get injured using your product incorrectly, they could blame your company.
Finally, a customer could sue because they’re unhappy with your product. Even when a lawsuit is frivolous, your small business still needs to pay for a legal defense.
Product liability insurance provides coverage when your product or completed service:
- Damages someone’s property
- Causes a bodily injury
- Makes someone sick
- Causes wrongful death
How does product liability insurance protect common professions?
Manufacturers
Manufacturers invest in this coverage for protection when customers sue over a product. It can help pay for lawsuits related to design defects, manufacturing defects, and similar issues.
Retailers, distributors, and wholesalers
Retailers, distributors, and wholesalers can be held liable for damages caused by items, even if you weren’t directly responsible for a product defect or other problem. Product liability insurance also helps cover lawsuits over marketing defects, such as improper labels or a lack of warnings.
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Tradesmen
General contractors and other construction and installation professionals need this coverage in case their work is linked to an injury or property damage after it’s completed. For example, if a homeowner sues because their newly installed sink leaks and damages their flooring, this policy would help pay your legal costs.
Beauty and cosmetology
Professionals who work in the beauty and cosmetology industry should also invest in product liability insurance. If a product that you apply or sell causes an allergic reaction or other adverse effect, this coverage can help pay your legal defense fees and the cost of a settlement.
Food services
Restaurants and other food service businesses rely on product liability insurance to protect against legal costs related to food poisoning and food allergies. If a customer gets sick after eating at your restaurant, this policy can help pay for attorney's fees, court-ordered judgments, and other costs.
Top professions that need product liability insurance
Don't see your profession? Don't worry. We insure most businesses.
How much does product liability insurance cost?
The cost of product liability insurance is usually included in your general liability insurance premium. General liability costs a median of $42 per month.
Your cost is based on factors including:
- Amount of coverage
- Industry and risk factors
- Location
- Number of employees
Manufacturers face higher risks and may end up paying more for this insurance policy.
How do you buy product liability insurance?
Insurance companies usually include product liability insurance with a general liability policy. This is typically called products-completed operations coverage. “Products” refers to the items you make or sell. “Completed operations” refers to completed work.
But some retailers or manufacturers may need to buy this coverage outside of their general liability policy.
Check with your agent to make sure your general liability policy includes this coverage. When you purchase a policy, you’ll get a certificate of liability insurance as proof of insurance.
Product liability insurance vs. general liability insurance
Though they are often purchased together, these two policies are not the same.
General liability insurance provides coverage against the most common small business claims. It covers accidental damages, such as a customer slipping in a puddle at your shop and breaking an arm (or their phone). It also helps pay for lawsuits that claim you damaged a competitor’s reputation or copied their logo.
Product liability insurance covers damages related to your products or completed services. That’s why manufacturers, retailers, and contractors need both types of coverage.
Ask your insurance agent what you need to protect your business. For example, adding product recall insurance to your general liability policy will cover the potential costs of a recall.
Does product liability insurance cover problems with software or an app?
Product liability insurance is not designed for software, applications, and similar IT and technical products. Tech business owners should opt for an errors and omissions insurance (E&O) policy to protect against coding mistakes and software errors.
Product liability insurance covers lawsuits over physical harm caused by a product. For example, it would provide coverage if your software caused a battery to overheat and injure someone.
Updated: June 29, 2022