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What Is Product Liability Insurance?

Product liability insurance addresses injury or damage claims involving defective products your business makes, distributes or sells.

What Does Product Liability Insurance Cover?

Product liability insurance addresses liability for injury or damage associated with a defective product that a business manufactures, wholesales, distributes or sells. 1,2,3,4

Defective Products and Roles in the Chain

Describe where your business sits in the supply chain. Designing an appliance, manufacturing a component, importing the finished item and selling it in a shop are different roles. Include each role you perform so the quote reflects how the product reaches the customer. 3,1,5

General Liability and Completed Work

Product-liability protection may be part of a general-liability policy as products-completed operations, or quoted as a stand-alone product; confirm which contract you are being offered. 3,4,5 Separate injury or damage from products that have left your possession from injury or damage arising out of completed work. 4,5

Who Needs Product Liability Insurance?

Consider this if you make, import, distribute or sell products. Your role in the supply chain affects the coverage you need to discuss. 3,1,4 6,3

Coverage Examples

These are examples, not coverage guarantees. Your policy terms and the facts of the claim determine what is covered.

What happened

A Customer Says Your Product Injured Them

A customer alleges that a product you sold caused an injury.

How coverage may help

Product liability may address the claim. Your role in making or selling the product, the product itself and the policy terms all matter. 1,2,3,4,6

What happened

You Need to Take a Product Back

Your team finds a product problem and decides to withdraw affected stock from customers.

How coverage may help

Product liability doesn't automatically pay the cost of a recall. Product recall coverage may help with the withdrawal expenses if the event meets its terms. 1,2,3,4,5

How Do You Compare Coverage and Costs?

Your Product and Recall Expenses

Ask how the quote treats damage to your own product and claims that the product failed to perform as expected. 5,4 Ask whether the quote excludes the cost of withdrawing or recalling products; product-liability protection does not automatically pay recall expenses. 5,4,3

Limits and Product Communications

Compare the products-completed-operations aggregate with the general aggregate and ask whether defense expenses reduce those limits. 4,5 Discuss instructions, warnings and how the product is marketed, because those communications can be part of a product-liability claim. 3,5
Comparison pointWhat to ask
Products-completed-operations aggregateHow much is available after products leave your possession or work is completed?
General aggregateHow much is available for other covered liability claims in the period?
DefenseDo defense expenses reduce those limits?
Instructions and warningsHow does the quote treat manuals, labels and marketing claims about the product?
4,5 3,5

What Do You Need for a Quote?

Products and Distribution

Prepare product descriptions, your role (make, assemble, import, distribute or sell), sales and where the products are used or sold. 3,1,4

Testing, Complaints and Prior Losses

Have testing, quality-control, complaint, warranty, lawsuit and prior-loss information available when discussing eligibility and terms. 6,3
PrepareHow to use it
Product descriptions, your role, sales, and where products are used or soldMatch the quote to whether you make, assemble, import, distribute or sell.
Testing, quality-control, complaint, warranty, lawsuit and prior-loss informationGive the broker the eligibility facts an underwriter is likely to ask about.
3,1,4 6,3

Key Terms in Plain English

Products-Completed Operations

Coverage concerning products that have left your possession and work that has been completed. 4,5

Products Aggregate

The overall products-completed-operations limit, which should be compared with the general aggregate and defense terms. 4,5

Frequently Asked Questions

Does Product Liability Pay for a Recall?

Not automatically. Withdrawal and recall expenses can be excluded even when product-injury liability is insured. 5,4,3

Is Product Liability Part of General Liability?

It may be included as products-completed operations or offered as a standalone policy. Confirm which arrangement you're buying. 3,4,5

Do Retailers and Distributors Need to Consider Product Liability Insurance?

Yes. Product-liability questions can involve retailers and distributors as well as manufacturers, component suppliers and packagers. Describe your role in getting the product to the customer when comparing coverage. 3,1,5

Can Instructions or Warning Labels Lead to a Product Liability Claim?

Yes. Instructions, warnings and marketing can be part of a product-liability claim. Include those materials in the coverage discussion rather than focusing only on how the product is made. 3,5

Which Insurance Providers Offer Product liability?

Sources

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Updated .

Sources checked .

Spot, a product of Tools for Enlightenment, publishes this research and works in the commercial insurance market. Editorial policy. To suggest a correction, contact Spot with the page URL and supporting source.

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