Product liability insurance covers your legal expenses when a product that you manufacture or sell causes an injury, illness, or other damages.
If an item that you sell or manufacture leads to a product injury lawsuit, product liability insurance can cover the cost of hiring an attorney. It would also cover the resulting settlement or court-ordered judgment. Product liability insurance covers lawsuits from customers as well as bystanders.
Example: A coffee shop sells a cup of hot coffee and the customer fails to secure the lid tightly. When he goes to take a drink, he spills hot coffee all over himself and suffers mild burns. The customer files a lawsuit that is eventually dismissed, but the coffee shop still had to pay for legal defense costs.
Product liability insurance provides coverage when an item you sell or manufacture damages a customer’s property. The damage could be related to a product defect.
Example: A smoke shop sells an e-cigarette to a customer and the battery explodes, causing a small fire in the customer’s home. The customer sues the shop to recoup the cost of a new couch and carpet.
This policy protects against illnesses caused by products sold or manufactured by your business.
Example: A grocery store sells a jar of expired mayonnaise to a customer, who gets sick upon eating it. The customer sues the grocery store over the resulting emergency room visit and missed days of work.
Product liability insurance also covers lawsuits, burial costs, and other expenses related to a death caused by your product.
Example: An electronics store sells an electric scooter to a customer. Due to a product defect, the scooter is unable to stop properly and the customer is hit by a car. The electronics store is held liable for the customer’s death.
If an employee is injured by a product sold or manufactured by your business, workers’ compensation insurance would cover the employee’s medical bills. It would also cost your legal costs if the employee sues over the injury.
General liability insurance protects against common third-party (non-employee) accidents, including slip-and-fall injuries at your business and customer property damage.