Product Liability Coverage

On Point.

Product Liability Coverage insures your manufactured product in the event that it may cause a loss.

When you manufacture a product that is uninsured against liability – you leave yourself exposed as a business owner. A product use disclaimer can only take a small amount of your liability for your manufactured product. Regardless of any labels or warnings – property damage and bodily injury could result from any misuse of your product. Litigation surrounding your advertising can also be a result of mislabeling your product or promoting misinterpreted ads.

Product Liability Coverage can provide protection
if the use of your product causes property damage or bodily injury to a third-party. Even if you are not at fault – you may be forced to defend yourself in court, and those costs can escalate quickly.

Issues with products that you manufacture can result in the following claims:

  • An illness, sickness, or allergic reaction due to a food or beverage.

  • A malfunctioning product which causes injury to a customer.

  • A malfunctioning product which causes property damage.

Which business are you?

Can you give me a few examples of Product Liability Coverage in action?

Three examples where your Product Liability Insurance coverage steps into action include:

1

You run a hair salon and sell shampoo and conditioner under your brand. A customer that purchases shampoo from you claims that your hair product has caused severe burning and tingling in their scalp. They then sue you for bodily injury. Without product liability insurance, you could be held liable for medical fees and legal expenses.

2

You manufacture mechanical parts
for tractors, and in your product description the product is mislabeled as being compatible with a tractor that it isn’t actually compatible with. The resulting mechanical issues of the incompatible part leave your customer’s tractor irreparably damaged – leading to losses in yield at their farm. Your insurance coverage would cover the cost of repairs as well as a settlement for your customer’s loss of ability to work.

3

You work as a website designer and one of your clients has asked that you develop a landing page for a new service offering. While making the web page live there is a malfunction and a large number of customer information is leaked online – your company is named in a lawsuit. Product liability insurance would cover any settlement fees and legal expenses.

How is the cost of Product Liability Coverage determined?

The cost of Product Liability Coverage is largely determined by your business and product category, and other risk factors. Depending on your provider, product liability insurance may require a separate purchase as it will not generally be included with your CGL policy. Your cost for Product Liability Coverage is calculated by assessing several factors – including:

  • Your insurance claims history.
  • The type of product you sell.
  • Associated risks with product.
  • Coverage limits.
  • Your annual/projected annual revenue.

What if my business needs additional types of liability coverage?

Business owners can extend their existing Product Liability Coverage with Commercial Umbrella Insurance. This will extend existing maximum policy limits, allowing your insurance company to cover you for more expensive, or extensive lawsuits.

If your business is exposed to additional liability risks beyond what a general liability insurance policy can cover, you can acquire separate liability policies. You can bundle the following insurance policies with your existing policy:

  • Cyber Liability Insurance

  • Liquor Liability Insurance

  • Commercial General Liability Coverage

Business Insurance – 2 Minute Insights

Common Commercial Insurance Categories

Real Estate Developer

Retail Enterprise

Contractor

Manufacturing

Garage Repair Shop

Professional Services

Medical Services

Lawyers & Law Firms

Fleet & Commercial Auto

Wholesaler / Distributor

Landlord / Rented Dwellings

Food & Beverage