What Is Product Liability Insurance? 

Product liability insurance is designed to help protect companies from financial losses stemming from claims involving their products. If a product results in injury, illness or property damage, the manufacturer, distributor or seller may be held legally accountable. This insurance can help cover expenses such as legal defense, settlements and court-awarded damages related to such claims.

Who Needs Product Liability Insurance?

This insurance is essential for businesses involved in designing, producing or selling physical goods. Even with rigorous quality control, defects can occur and consumers may file lawsuits alleging that a product was unsafe or failed to perform as advertised. Common claims include manufacturing defects, design flaws and inadequate instructions or warnings.

For example, if a kitchen appliance malfunctions and causes a fire, the injured party might sue the manufacturer. Without product liability insurance, the company would have to pay for legal defense and any damages out of pocket. With coverage, these costs are typically handled by the insurer, helping the business avoid financial ruin.

Product liability insurance is not just for large corporations. Small businesses, startups and even online sellers can benefit from this protection. In many industries, having this insurance is also a prerequisite for doing business with retailers or distributors, who want assurance that they won’t be left exposed to liability.

How Much Is Product Liability Insurance?

Product liability insurance premiums can be influenced by the type of product, the volume of sales, the company’s claims history and the level of risk associated with the product. High-risk products like electronics, food or children’s toys generally come with higher premiums.

Learn More

For product liability insurance near you, contact DRD Insurance Agency.

This blog is intended for informational and educational use only. It is not exhaustive and should not be construed as legal advice. Please contact your insurance professional for further information.