- Last Updated:
- 10/30/2024
- Brianna Hale
What’s the last product you bought? For me, it was a shirt.
If this product caused an injury or damaged something else you own, who would you seek compensation from…
The store that sold it to you?
The warehouse it was stored in?
The manufacturer who produced it?
The supplier who provided the materials?
Whether it’s a quirky gadget that sparks instead of shines or a snack that unexpectedly bites back, products can lead to mishaps that involve a lot of different people.
Product liability insurance is like bubble wrap for your business: it protects you when times get rough. Let’s unwrap this coverage to see what it can do for you!
Product Liability Insurance Explained
Products liability insurance is designed to protect your business from consumer accidents and operational errors you could be held liable for.
Any business in the supply chain that handles a product through manufacturing, distribution, or sales can be affected by a product incident — meaning everyone could be held responsible and named in a claim or lawsuit.
What Does Product Liability Insurance Cover?
Product insurance can cover a variety of incidents and claims, including (but not limited to):
Accidental death
Bodily injury or illness
Design flaws
Failure to provide warnings
False advertising
Manufacturing defects
Mislabeling
Poor product instructions
Property damage
Shipping damage
Liability insurance is intended to lower or eliminate the cost associated with product-related claims, like:
Medical bills
Legal expenses
Settlements or negotiations
Compensation for damages
Repair or replacement costs
Pro-Tip: Insurance Canopy’s product liability insurance automatically includes General Liability coverage at no extra cost, but your plan can be customized to only offer you product insurance coverage.
Who’s Responsible for Insuring Products?
Every business is responsible for putting a safe product on the market, so just one error can cause a chain reaction that affects every other business involved. This makes it crucial for each business to obtain their own policy and coverage.
Specific types of businesses that need liability insurance for products include:
- Producers and suppliers
- Importers
- Warehouses and distribution centers
- Transportation companies
- Wholesalers and distributors
- Retailers
- E-commerce businesses
- Amazon, eBay, Etsy, and other online sellers
Why Producers & Suppliers Need Coverage
Any defects or safety issues caused by faulty ingredients or poor production can trigger claims or lawsuits, impacting every other business in the supply chain. Liability insurance can:
- Cover legal costs, medical bills, and damages from defective products
- Protect you for claims of mislabeling, false advertising, or faulty design
- Keep you compliant with regulatory and contractual requirements
Did You Know? Manufacturing defects are the leading factor for most product-related accidents and claims.
Why Importers Need Coverage
Because you bring products from international manufacturers into the local market, you can be held accountable for any defects or safety issues in these products. Liability insurance can:
- Protect against claims related to product safety
- Cover legal expenses and damages
- Keep you compliant with contracts and international trade regulations
Why Warehouses & Distribution Centers Need Coverage
Any errors, damages, or safety issues that occur in the hub of a warehouse or distribution center can lead to liability claims. Having products insurance can:
- Cover defects or damages that occur before a product comes to you
- Protect you for products damaged, contaminated, or improperly stored in your facility
- Pay for lawsuits and expenses related to consumer injuries or damages
Why Transportation Companies Need Coverage
If products are damaged during transit, your company can face liability claims. Your insurance policy can:
- Cover you for products not properly designed or packaged to withstand transportation
- Pay for legal fees and medical expenses related to consumer accidents
- Maintain compliance, reliability, and trust with your clients
Why Wholesalers Need Coverage
If any of the large quantities of products you distribute to retailers and other businesses cause harm or fail to perform as advertised, you could be named in a legal suit. Liability insurance for products can:
- Cover claims related to manufacturing defects or shipping damages
- Protect you for unknowingly distributing a faulty product
- Keep business operations from coming to a halt
Why Retailers & Online Sellers Need Coverage
Even though you may not manufacture the products you sell, you can still be held liable for injuries or damages they cause. Product insurance can:
- Protect against claims arising from defective products
- Cover the cost of consumer injuries and damages
- Pay for legal fees, settlements, and other associated costs
What Does Products Liability Insurance Not Cover?
Like all insurance types, product liability insurance carries exclusions. For example, your policy cannot cover claims related to:
- Professional negligence – Cover it with Professional Liability Insurance (E&O)
- Employee injuries – Cover it with Workers’ Compensation Insurance
- Stolen products – Cover it with Inland Marine Insurance
- Product recalls – Cover it with Product Recall Insurance
There may also be specific types of products or operations named as excluded in your policy. If you have coverage through Insurance Canopy, you can call or email us and a licensed, non-commissioned agent will be happy to talk to you about the details of your policy.
Pro-Tip: Make sure you review and understand your policy with your agent. Exclusions can be often covered by another type of coverage you can bundle with your plan; if one kind of insurance doesn’t pick up a claim, another coverage could.
How Much Does Liability Insurance for Products Cost?
For our policyholders, the average cost of liability insurance for products starts around $1,000 per year, but this depends on various factors like:
- The specific products you want to insure
- The types of coverage you need
- The amount of coverage (your policy limits)
- Your history of insurance claims
- Your daily business operations
- The risks associated with your industry
Each of these can impact product liability insurance costs, which means every policy is priced and tailored to that individual business.
Why Insurance Canopy Is Your Solution For Product Liability Insurance
Insurance can already feel complex enough, and trying to find specific coverage for your business might feel overwhelming.
The first step is as easy as applying for a free customized quote online. With Insurance Canopy, you no longer have to navigate the world of insurance alone!
Our in-house licensed agents can help you understand what types of coverage you need (and how much insurance you need) and personalize a policy to meet your exact needs. And if we can’t write your policy, then we will work with our network of providers to find someone who can.
Once armed with your new liability policy, you can start to expand your business opportunities. Take more time to ideate new products, catch up with your customers, or perfect your partnership pitch while we handle the risks and claims.
Why wait? You can get started in minutes today and have your quote within 24 (business) hours.
Apply for a product insurance quote today and begin protecting your business tomorrow with Insurance Canopy!
