Product liability insurance is a crucial type of protection for businesses that manufacture, distribute, or sell products. It helps cover legal costs and financial losses if a product you make or sell causes harm to a person or their property.

What Product Liability Insurance Covers:

• Bodily Injury: If someone is injured by your product (e.g., an appliance malfunctions and causes burns), it covers:
  • Medical expenses
  • Rehabilitation costs
  • Lost wages
  • Pain and suffering
• Property Damage: If your product damages someone else’s property (e.g., a faulty toy causes a house fire), it covers:
  • Repair or replacement costs
  • Loss of use of the damaged property
• Defense Costs & Judgments: If you’re sued over a defective product, your insurance covers:
  • Lawyer fees and court costs, even for baseless lawsuits
  • Judgments against you or settlements, up to your policy limit

Who Needs Product Liability Insurance:

• Manufacturers: Those who design and make products bear significant risk.
• Wholesalers & Distributors: Even if you didn’t make the product, you can be liable if it’s defective and causes harm.
• Retailers: The final link in the supply chain, retailers remain vulnerable to product liability claims.

Why It’s Important:

• Product Defects Happen: Even with the best quality control, mistakes or unforeseen problems can cause products to malfunction.
• Lawsuits are Costly: Defending against product liability lawsuits can be incredibly expensive, and judgments can bankrupt a company.
• Consumer Protection: Ensures that those injured by defective products have a means to be compensated.
• Client Requirements: Many retailers and distributors will require businesses to carry product liability before they’ll purchase your products.