Did you know that 75% of all product liability injury awards during 2018-2019 were $1 million or more? You can’t always prevent product defects and your items from injuring a person.

However, you can prevent how much you come out of pocket for these rewards. If you don’t have the funds to cough up money if you are sued for product liability, you need insurance.

Keep reading to learn more about product liability insurance.

What Is Product Liability Insurance?


Product liability insurance protects your business against claims that a product you made or sold caused property damage or bodily injury.

An insurance company might offer this as a standalone policy while others include it in general liability insurance.

Without product liability commercial insurance, your business will have to pay out of pocket for types of general liability claims. Product defects can cause your business to go completely under without insurance.

Why Is Product Liability Insurance Important?

If your business sells products to consumers, you are at risk of a defect causing damage or bodily injury. Even if your products are checked by manufacturers, it’s possible to miss something.

If a customer sues your business because one of your products injured them, your product liability insurance will cover the following:

  • The customer’s medical bills
  • Legal fees and costs to defend your company
  • Judgments or settlements made against your company

Every cost must be paid out of pocket if you forgo product liability insurance. Not every business, especially small businesses, have the resources to cover product liability lawsuits.

Who Needs Product Liability Insurance?

Liability Insurance

Product commercial liability insurance can benefit various industries. If you sell products to clients or customers or have a supply chain, you need this insurance policy. This goes for:

  • Retailers
  • Manufacturers
  • Wholesale and distribution businesses

For example, gun manufacturers and stores that sell guns would benefit from this policy. Learn more about the insurance options in this guide.

A problem at any stage of product production can lead to defects that put your business at risk.

What Does This Policy Cover?

Product liability coverage can help with different types of claims. Insurance will cover the following:

  • Strict liability
  • Manufacturing defects
  • Design defects
  • Improper warning

It’s important to know that product liability insurance isn’t the same as product recall insurance. To cover product recalls, you’ll need to buy an endorsement for your business.

Shop around for insurance

Every business will have a different price point for this insurance plan depending on policy limits, claims history, and other factors.

If you don’t get enough coverage for all claims, you’ll have to come out of pocket once your policy caps.

Get Product Liability Insurance Today!

If you sell products of any kind to consumers, it’s necessary for you to have some form of product liability coverage. There is always a risk of product defects no matter how many stages of production there are.

If you want to avoid paying for lawsuits and settlements out of pocket, product liability insurance is the only way to make it happen.

Once you have it, you’ll be covered for design defects, manufacturing defects, strict liability, and improper warning. For more informative posts like this, check out our other business blogs.

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