Paige Cerulli Last Updated On: June 5, 2024

Product Liability Insurance for Small Business

Whether your business manufactures, distributes, sells, or installs products, your business could be named in a lawsuit if one of those products causes damage or injury. Product liability insurance helps to protect you against liability claims.

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What Is Product Liability Insurance?

When you buy product liability insurance for small business use, you’re protecting your business against accidents caused by a defective product. If a consumer is injured when a product breaks or if a faulty product damages their home, they can sue your business, even if you weren’t aware of the issue.

Product liability coverage helps to pay for resulting claim and lawsuit expenses, including legal costs. It can also help to cover medical bills and property repair expenses for the customer.

Is Product Liability Insurance Required?

While you aren’t required to carry liability insurance for products by law, there are many reasons why it’s a good idea to buy product liability coverage. Retailers, manufacturers, and other businesses involved in the supply chain might require you to carry product liability insurance as a condition of working with your business. This requirement is commonly written into contracts.

Additionally, this insurance can help you protect your business from risks that are out of your control, giving you peace of mind that you won’t have to pay legal fees out of pocket if your business is sued.

Who Needs Product Liability Insurance?

If your business manufactures, distributes, sells, or installs products, then it’s a good idea to buy product liability insurance. Here are just a few types of businesses that would benefit from this type of insurance:
  • Product designers who create a product could be liable if that product is faulty and results in damage or physical harm to a buyer.
  • Manufacturers who physically produce the product can be liable if the product is defective, such as if faulty wiring leads to a fire or a food product is mishandled, resulting in food poisoning.
  • Importers who bring in faulty goods from another country can be liable for the damage caused by the product, even though they didn’t actually create the product.
  • Wholesalers and distributors can also be held liable for the products they sell, handle, or distribute.
  • Online retailers who resell products manufactured by others, or who sell their own products, are liable for any faulty products that their business sells.
  • Retailers can be held liable for damages caused by products that they sell.

How Much Does Product Liability Insurance Cost?

The cost of product liability insurance depends on the insurance company, your business size, and the industry your business operates in and the associated level of risk. The best way to find the most affordable product liability insurance is to shop around and compare policies. You can get a free product liability insurance quote today. Then, compare not only your premium costs, but also the coverage limits and exclusions of each policy to decide which is best.


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