Product liability insurance cost

Product liability insurance is usually included in your general liability insurance policy. You may see it referred to as:

• Product liability insurance for retailers, manufacturers, and wholesalers
• Products-completed operations coverage for construction and installation businesses

Small businesses pay an average of $42 per month, or about $500 annually, for general liability insurance.

Our figures are sourced from the median cost of policies purchased by Insureon customers from leading insurance companies. The median offers a better estimate of what your business is likely to pay because it excludes outlier high and low premiums.

While Insureon's small business customers pay an average of $42 monthly for general liability insurance, more than a quarter (29%) pay less than $30. In addition, 41% pay between $30 and $60 per month. The cost varies for small businesses depending on their risks and the coverage they choose.

Insurance companies consider several factors when determining how much to charge for a product liability premium, including:

• Industry risks
• Property value
• Coverage limits and deductible
• The type of products you sell
• Location
• Sales revenue

As with other business insurance policies, the cost depends on how much liability coverage you buy. If you choose a policy with higher coverage limits, you can expect to pay a higher premium.

Most small businesses (91% of Insureon customers) choose a general liability policy with a $1 million per-occurrence limit and a $2 million aggregate limit. That means the policy will pay up to $1 million on any single claim, and up to $2 million on all claims during the policy period (typically one year).

Because defense costs and legal fees from product liability lawsuits can be so costly, you may want to consider higher limits. If you're unsure how much coverage your business needs, chat with a licensed insurance agent.

Your business location plays a significant role in the premium that you pay. For example, a business in an area with more foot traffic may pay a higher premium because they have an increased risk of customer accidents.

Premiums can also vary slightly depending on your state. For instance, small business owners in Oregon pay an average of $37 per month for general liability insurance, while businesses in Wyoming have an average premium of $60 per month.

While product liability is recommended for small businesses that manufacture or sell products you may need other types of business insurance as well. Most states require by law that small business owners carry workers' compensation to cover medical expenses from work-related injuries, and commercial auto insurance if they have business-owned vehicles.

Your industry is the main factor that determines how much general liability insurance costs. Businesses in low-risk industries can expect to pay less for general liability, which includes product liability coverage.

For example, construction businesses pay more for coverage than retailers because they have a high risk of third-party bodily injuries and property damage. Other factors such as annual revenue, number of employees, and your claims history can also affect your premium.

The graph below shows how the type of business impacts what you'll pay for general liability insurance.

A small proportion of businesses need to buy a product liability insurance policy outside of general liability coverage. If you do, then your product liability risks will determine the cost of a policy.

For example, manufacturers and sellers might need a separate product liability policy, or one that includes product recall insurance. To determine the premium, insurance providers would consider your company's liability exposure and potential risk of facing legal action over defective products, design defects, product malfunctions, and other product liability claims.

Saving money on general liability coverage involves analyzing risks, reducing liabilities, and comparing general liability and product liability insurance quotes from multiple companies.

Here are a few ways small business owners can save money on product liability insurance:

Bundle your general liability insurance in a BOP. If you also want coverage for business property damage or theft, a business owner’s policy (BOP) is likely the best option for your business. This policy bundles general liability insurance and commercial property insurance at a lower cost than if the policies were bought separately.

Pay your premium annually.Many insurance companies offer discounts for businesses that pay the full annual premium instead of paying in monthly installments.

Risk management. A history of business insurance claims can make your premium go up. To keep costs low, you can take steps to reduce your risks of a claim. Product liability insurance covers risks related to your products and completed services, which means you might consider:

• Thoroughly testing any products sold at your shop to detect product defects
• Strict quality control to avoid manufacturing defects
• Rigorous employee training on installation of appliances or other items
• Working with trusted partners in your products' supply chain, such as importers and distributors
• Avoiding any type of product that causes property damage or potentially injures users

Insureon is the #1 independent agency for online delivery of small business insurance. We help business owners compare quotes from top-rated providers, buy policies, and manage coverage online.

By completing Insureon’s easy online application today, you can get free quotes for product liability insurance and other policies from top-rated U.S. insurance companies.

Once you find the right policies for your small business, you can begin coverage in less than 24 hours and get a certificate of insurance for your small business.

Insurance premiums vary based on the type of insurance a business buys. See our small business insurance cost overview or explore costs for a specific policy.