How much does 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, or
• products-completed operations coverage for construction and installation businesses.

The median cost of general liability insurance is $42 per month (about $500 annually) for Insureon customers. Unlike average cost, the median provides a better estimate of what your business is likely to pay since it excludes high and low outliers.

Most small business owners (48%) pay between $300 and $600 annually for their policies, and 17% pay less than $300. These figures were derived from an analysis of thousands of insurance policies purchased by Insureon small business customers.

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 the risk of third-party bodily injury or property damage is typically much higher. The graph below shows how the type of business affects 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. To determine the premium, insurance carriers would consider your company's risk of facing legal action over defective products, product recalls, design defects, and other product liability claims.

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 (92% 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 product liability lawsuits can be so costly, you may want to consider higher limits. If you're unsure how much coverage you need, chat with a licensed insurance agent.

Here are a few ways for small business owners to 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
• 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
• Avoiding any type of product that causes injury or property damage

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.

• General liability insurance
• Professional liability insurance
• Business owner’s policy
• Errors and omissions insurance
• Workers' compensation insurance
• Cyber liability insurance
• Commercial umbrella insurance
• Commercial auto insurance
• Employment practices liability insurance
• Directors and officers insurance