Product Liability Insurance
Quick answer: Product liability insurance helps pay defense costs, settlements and judgments when a product you make, distribute or sell is alleged to have caused bodily injury or property damage. Many businesses get it through the products coverage in their general liability policy, but some classes, including many cannabis operations, need it written separately. Recall costs usually need their own coverage.
As the owner of a business, you are liable for any products you manufacture or sell—and if somebody is hurt as a result of using the product, you may be at fault for the incident.
When you ask for coverage from our agency, we will determine the likelihood of a lawsuit being brought against you as a result of one of your products being used. Our experts can identify the risks associated with your products or services and appropriately scale a policy to cover those risks. We can also offer advice on how to make your products less prone to risk. This may involve modifying your product, packaging it differently, or changing any instructions and warnings included with the product. When done well, these precautions can help reduce the company’s liability and stop customers from using the product in an unsafe way.
DO I NEED PRODUCT LIABILITY INSURANCE?
If your company manufactures or sells any kind of product, it is strongly recommended that you have some form of liability coverage. Even products that are widely regarded as ‘safe’ can malfunction in a way that causes harm to the user, and defending against a lawsuit is usually expensive enough that many companies (and claimants) prefer to simply settle out of court. Product liability insurance can reimburse you for expenses (including defense costs and settlements) that occurred during this process.
Product liability cases that go to court are among the most expensive forms of personal injury cases, and as of 2013, these cases had an average payout of more than $6 million. All companies that obtain this type of coverage are encouraged to have a policy limit higher than the median payout—anything less makes it likely that your company will suffer significant losses if a jury decides against you.
Don’t forget to talk to your agent on a regular basis as your business continues to grow. Larger businesses often face larger risks than smaller ones (including, among other things, increased exposure as a result of having more customers who could potentially file a lawsuit). A plan that suffices for a small company may not be enough to protect a large one.
WHAT DOES PRODUCT LIABILITY INSURANCE COVER?
Product liability insurance mainly covers the legal obligations of a company. This may include payments like:
- Court fees
- Legal defense costs
- Personal injury awards
- Out-of-court settlements
- Miscellaneous fees that may occur during any of the above
If you feel any of these forms of coverage are missing from your policy, or if you are starting a business and need product liability coverage, speak to a Lions & Coventry Insurance Services agent or request a quote today.
Talk to a licensed producer: call (916) 967-7715 or request a quote online. Lions & Coventry Insurance Services, Est. 2009, CA Lic. #0G22084.
Product liability insurance FAQ
What does product liability insurance cover?
It responds to claims that a product you manufactured, distributed or sold caused bodily injury or property damage. Covered costs typically include legal defense, court costs, settlements and judgments, up to the policy limits. For many businesses this is the products-completed operations part of commercial general liability; higher-risk products may need a separate policy.
What does product liability insurance usually not cover?
It generally does not pay to repair or replace your own defective product, and it does not pay the cost of pulling products off the market. Recall and withdrawal expenses usually need separate product recall coverage. Policies can also limit claims tied to known defects or to liability you take on by contract, so read the exclusions.
Who needs product liability insurance?
Manufacturers, private-label brands, importers, distributors, wholesalers and retailers. Anyone in the chain of distribution can be named in a product lawsuit, and many retailers and distributors require their vendors to carry it and to name them as additional insureds. Cannabis manufacturers, distributors and dispensaries usually need it placed alongside cannabis general liability.
What information do I need for a product liability quote?
A list and description of your products, annual sales by product, where the products are sold, copies of labels, warnings and instructions, your quality-control and testing procedures, vendor and distribution contracts (including any additional insured or indemnity requirements), and your prior claims and recall history.
What drives the price of product liability insurance, and how do I get a quote?
Price depends on what your products are and how they are used, your sales volume, where they are sold, the limits your contracts require, and your claims history, so we do not publish rates. Call (916) 967-7715 or send your product list through our contact page, and a licensed producer will shop the coverage with carriers that write your product class.
Related coverage: Commercial general liability · Cannabis product recall insurance · Cannabis business insurance · Business insurance · Contact us
Brokerage guidance, not legal advice. Coverage depends on the policy form, underwriting and carrier availability.