Product Liability Insurance

Businesses that produce, sell or transport products can be exposed to risks long after product leaves their facilities. Product liability insurance is a specialized form of liability coverage. As a liability protection, policies normally help pay legal fees, settlements and judgements arising from covered claims. These liability policies don’t normally cover products themselves against theft, damage or loss. Those kinds of protections are typically acquired through an appropriate commercial property policy.

As is the case with most insurance policies, the exact claims that a specific product liability policy covers are determined by that policy’s terms, conditions and exclusions. There are, however, some common claims that many product liability policies offer at least some protection against. Some of the more common claims are those arising from: Production and manufacturing flaws, design defects, warning deficiencies, and instruction manual errors.

When a product causes significant damage or injury, almost any business along that product’s supply chain may be named in a liability suit. Therefore, many businesses can benefit from the protections that product liability policies offer. Manufacturers, wholesalers, retailers, transporters and product design consultants can all be accused and need protection. Even refurbishers and repair businesses may want coverage for the work they do.

Some general liability policies may provide product liability coverage, but not all do. Additionally, those that do offer product liability coverage frequently only afford a basic level of protection. In many cases, businesses are better protected by supplementing any product-specific protection that a general liability policy does have with a product liability policy.

Insurance companies base product liability premiums on many different factors. Some of the items that an insurer might take into consideration include number of products, intended purpose of the products, customers who use the products, materials the products are made from, warnings and instructions included with the products, and claims history of the business seeking insurance. Since there are so many factors, the cost of product liability coverage can likewise vary.