Product liability insurance covers your business from having to pay the full cost of legal fees if someone claims your product caused bodily injury or property damage.
You’ve put time, care, and intention into creating products people trust, but even well-made products can have unexpected outcomes.
Even if a claim takes you by surprise, product liability insurance helps protect you when the unexpected happens.
Quick Facts
- What it is: Insurance that steps in when a product you make, sell, or distribute causes harm to a consumer
- Who needs it: Makers, importers, and resellers of physical goods (not services)
- What it covers: Costs from product-related injuries and damages, like legal fees, medical bills, and property repairs
Quick Guide to What Product Liability Insurance Covers
Because your product can reach a wide variety of people, your liability insurance needs to cover a wide variety of claims.
Most product liability claims we see are caused by defects, like:
- Design defects: These occur when a product’s design is inherently unsafe. Even if manufactured perfectly, the product poses a danger.
- Manufacturing defects: These happen during the production process. While the product design might be safe, something went wrong while making it.
- Marketing defects: Also known as “failure to warn” defects, these involve inadequate instructions, the product’s proper use, or side effects.
Other common claims product insurance covers include:
- Allergic reactions
- Failure to provide warnings
- Foodborne illnesses
- Injuries or death
- Lawsuits and litigation
- Mislabeling
- Property damage
- Slander and libel
Think of product liability insurance like a safety net. It won’t stop someone from filing a claim, but it helps make sure a bump in the road doesn’t become the end of the road.
Read More: Check out our full guide to product liability insurance or explore our FAQs for quick answers!
What Product Liability Insurance Doesn’t Cover
Every insurance coverage has its limitations. Product liability won’t cover more than the injuries or damages caused by your insured products.
It also won’t cover:
- Damages to the product itself
- Employee injuries or damages
- Fraudulent activities
- Injuries you sustain from your product
- Intentional acts of harm
- Pollution or environmental harm
- Product recall costs
- Professional negligence
- Theft or damages to your property (rented or owned)
- Warranties or guarantees
Specific products and ingredients typically excluded from product liability insurance include:
- Aircraft and vehicles
- Children’s toys and furniture
- Construction gear and equipment
- Industrial and commercial products
- Infant products and supplies
- Ingredients like talc or illegal substances
- Military or police gear and equipment
- Products requiring a prescription
- Products that permanently alter or stay in the body
- Tobacco products and narcotics
- Weapons and ammunition
Unsure if your product is excluded? Contact us! Our licensed, non-commissioned agents will help you find the right coverage for your business.
Product liability protects you from the risks that follow your product, but doesn’t cover every part of your business. That’s why many sellers bundle policies, and understanding the difference between product liability and public liability helps you choose the right coverage for your business.
Real-Life Claim Scenarios
Here’s how product liability insurance can help in common situations:
| Situation | Covered? | Why? |
|---|---|---|
|
Lip balm causes an allergic reaction |
✅ |
Bodily injury |
|
Skincare serum explodes in transit |
✅ |
Property damage |
|
Unlisted product sold at a pop-up event |
❌ |
Not covered if unlisted on policy |
|
Child’s toy causes a choking hazard |
❌ |
Toys and children’s products (under age 4) are excluded |
Did You Know?
Insurance Canopy offers product liability protection (plus other coverages to protect your business) for a wide range of business types, including, but not limited to:
- Manufacturers
- Importers
- Wholesalers
- Distributors
- Retailers
Why Coverage Matters (Even for Small Businesses)
Even smaller brands face real risk because liability doesn’t scale with your business size. A single product issue can lead to significant costs, complex claims, or lost opportunities if you’re uninsured.
- Legal defense alone can cost tens of thousands of dollars
- Platforms like Amazon, Etsy, and retail stores often require a Certificate of Insurance (COI)
- Being insured builds trust with customers and helps you grow
- Your product may be small, but the claim against it might not be
Your products are built to help your customers, and our coverage is designed to help you succeed. Whether you sell online, in stores, or both, Insurance Canopy makes it simple to protect your brand.
Questions About What Product Liability Insurance Covers
How Does This Help if Someone Sues My Business?
If someone sues your business, product liability insurance helps cover the cost of:
- Lawyers
- Court fees
- Settlements
- Damages
This coverage provides financial support for product-related lawsuits, so you don’t have to pay to defend your business in court.
Does Product Liability Insurance Cover Allergic Reactions?
Yes, product liability insurance can cover allergic reactions. This coverage may include medical bills and related legal claims.
Coverage applies if an insured product causes a reaction and you properly list all ingredients.
Do I Need Product Liability Insurance if I Sell Online?
Yes, you need product liability insurance even if you sell online through your website, Amazon, Etsy, or other platforms. It’s designed to protect you from post-sale risks like injuries or damages caused by your products.
Do I Need Insurance to Sell White-Labeled Products?
Yes, you need insurance to sell white-labeled products. If your brand or name is on the product (even one made by someone else), you can still be held legally responsible for claims.
Does General Liability Cover Product Liability?
No, general liability insurance does not fully cover product liability. While it may offer limited protection, businesses that make or sell physical products typically need separate product liability insurance for complete coverage.
Check out Product Liability Insurance vs General Liability Insurance for a more in-depth comparison!
