Product liability lawsuits happen when a product causes bodily injury or property damage, and a business is held responsible. These cases can affect businesses of any size and often stem from design, manufacturing, labeling, or marketing issues.
Every product — no matter how simple or well-designed — carries some level of risk. The good news? Many product liability issues follow patterns you can learn from and plan for. If you’ve ever wondered what product liability lawsuits look like in real life, you’re in the right place!
Check out these six cases and get lessons to protect your business, from the manufacturing line all the way to your customers’ doorstep.
What Is a Product Liability Lawsuit?
A product liability lawsuit is when a customer sues a company because its product has harmed them. The lawsuit’s purpose is to compensate, or make things right with, the injured party for the damages they suffered. Any business involved in the supply chain can be held legally responsible, including:
- The manufacturer
- The importer
- The distributor
- The seller or retailer
- You, the business owner
Common triggers include bodily injury (the customer is physically hurt by the product) and property damage (their property is damaged due to the product). Product lawsuits can be brought against any business that produces items for sale — even small, part-time, or online businesses!
Pro Tip
With defense costs, settlements, and damages awarded, lawsuits can get expensive fast. If you’re researching product liability for your business, chances are you need product business insurance to protect against liability claims related to the products you make, move, or sell!
Types of Product Liability Claims
Most product liability lawsuits fall into a few common categories:
- Product tampering
- Product failure (design defects)
- Mislabeling or warning failures
- Manufacturing defects
- Bodily injury claims
- Property damage claims
6 Real Product Liability Cases Businesses Should Know About
Product liability lawsuits are more common than many business owners expect (especially with the U.S.’s litigious culture)! In fact, product liability is a top class action lawsuit category, with the largest settlement in 2025 totaling $17.9 billion. These six product liability examples demonstrate how lawsuits can unfold in real life and how you can proactively manage your risk.
1. Product Tampering
One of the most well-known examples is the 1982 Tylenol tampering case, where capsules were laced with cyanide and placed back on store shelves. The incident led to multiple deaths and a nationwide recall. The death claims and resulting fallout cost the company nearly $100 million.
Why It Matters: Even though the manufacturer did not cause the tampering, the company still faced legal exposure and reputational damage because the product reached consumers in a dangerous condition.
Lesson for Small Businesses: If your product is tampered with after it leaves your facility and before the customer receives it, your business can still face a product liability claim. A product tampering case can also cause customers to lose trust in your brand, even though the issue may have started outside your control.
2. Product Failure
A common example of a product liability lawsuit is product failure, which is when the product doesn’t work as intended.
In a 2025 lawsuit, a New York City man claims his Nutribullet blender exploded while in use, sending “shrapnel” into his hand. And in 2022, Nutribullet agreed to a class action lawsuit settlement over claims its blenders are prone to overheating, costing them $10 million.
Why It Matters: The customer alleges the product had a known design flaw that causes it to over-pressurize and that the company failed to act on the knowledge.
Lesson for Small Businesses: If your product can fail under normal use, especially in a way that causes injury, your business can be held liable, even if it works most of the time.
3. Mislabeling
Some lawsuits are based on the labels affixed to a product, not on the product itself. Customers want to know exactly what they’re paying for, so your product labels must be accurate and not misleading.
Two women filed a class action lawsuit against Costco, alleging their rotisserie chicken is falsely advertised as containing no preservatives. They claim the chicken contains two added preservatives and are asking for an unspecified amount in damages.
Why It Matters: The plaintiffs say the wholesale retailer violated consumer protection laws by falsely advertising its product in stores and online.
Lesson for Small Businesses: Even if your product is accurately labeled, issues like misprints or misinterpretations of your packaging copy can lead to product liability claims.
Pro Tip
Are you still gearing up to launch your first product? Check out our free product liability guide checklist to ensure your business is covered and compliant before you go live!
4. Manufacturing Defect
Product liability can be traced to the manufacturing stage, too. If the ingredients or elements used are compromised or defective, your final product may be unsafe for consumers.
In a lawsuit filed against a Chinese manufacturer in 2025, a California woman claims their product, a power bank containing a defective lithium-ion battery, is unsafe to use. The lawsuit claims the issue could have been avoided if the company had used alternative materials that were available during production.
The class action lawsuit aims to represent all U.S. residents who purchased the product. With 488,000 units recalled, the potential scope of the lawsuit could be substantial.
Why It Matters: The power banks contained a battery that could cause burns or fires during normal use. The issue affected multiple units, created a broader safety risk, and posed a potential for repeated claims.
Lesson for Small Businesses: Manufacturing defects can scale quickly. If the same flaw exists across multiple products, your business can face the financial strain of multiple claims or a class action lawsuit.
5. Bodily Injury
When products physically injure customers, they can be strongly motivated to take legal action against a company. Many product liability claims are spurred when a customer suffers bodily injury.
In 2025, a Las Vegas jury made its verdict against a bottled water company after claims its product caused liver injuries and at least one death. The water was found to contain hydrazine, a toxic chemical used in rocket fuel. The company’s total liability amounts to over $11 billion.
Why It Matters: The lawsuits against this company claimed it failed to ensure product safety and quality control, which led to severe illnesses, including one death.
Lesson for Small Businesses: If your product is meant for consumption and directly impacts customer health, the stakes are higher! Contamination and safety failures can lead to high-value claims, even for a product as simple as bottled water.
A Real Claim We Saw
A yerba mate supplement company faced a product liability claim when a customer alleged they experienced heart issues after consuming the product. The claim incurred $7,893. With the financial stress of liability claims, product liability insurance is a crucial safeguard as your business grows!
6. Property Damage
Product-related damage can happen to customer property, too, and it’s another common cause of lawsuits.
In 2025, LG Electronics recalled nearly 500,000 ovens due to front-mounted knobs that could be unintentionally turned on. The ovens have been linked to over 28 fires, with some causing property damage exceeding $340,000. They also caused injuries and several pet deaths.
Why It Matters: Even without direct user error, the front knobs created a fire hazard, which could lead to property damage and injury. There isn’t an active class action lawsuit over this product, but it’s crucial to note these are sometimes filed afterward when a recall is considered insufficient.
Lesson for Small Businesses: Accidental damage to third-party property can still result in costly claims. Whether a product has a design flaw or doesn’t properly warn users of risks, a business can still be held liable for property damage caused by its product.
What Businesses Can Learn From Product Liability Lawsuits
Every business can learn from these real product liability cases. They highlight the importance of ensuring product safety, from design to labeling, and having a plan in case things go wrong.
Here’s a summary of best practices to follow:
- Review product labels and warnings carefully: Make sure customers understand how to use your product and what the risks of use include
- Check supplies and manufacturing quality controls: Stay active in the production process to maintain safety at each stage
- Avoid overstating product performance: Your marketing should be accurate, so don’t add lofty claims that build unreasonable customer expectations
- Document testing, sourcing, and safety procedures: Clear written records can help if your product’s safety is challenged later
- Carry product liability insurance: Having the right coverage for product-related customer injuries or property damage prevents your business from paying for the cost of lawsuits on your own
Remember: Lawsuits can happen to any business, even if you’re just starting or sell a small range of “low-risk” products. If a customer gets injured, they won’t care how big or established your business is. If they decide to take legal action, their primary goal is to secure compensation for the damage… which is where insurance comes in!
How Product Liability Insurance Protects Your Business
Product liability insurance is designed to financially protect your business from bodily injury and property damage claims tied to your products. Think of it as essential coverage for after the sale, safeguarding your business no matter where it fits into the supply chain.
This coverage can pay for:
- Bodily injury
- Property damage
- Legal defense in case of a lawsuit
- Medical expenses
Insurance Canopy offers reliable product liability coverage customized to your business needs. With the safety net of insurance, you can bring your products to market confidently! Get a free quote to explore your coverage options.
Coverage varies based on your policy, products, and risk level. Check out our product liability insurance FAQs for more information!
FAQs About Product Liability Lawsuits
What Are the Most Common Types of Product Liability Claims?
The most common types of product liability claims stem from manufacturing, design, and labeling defects, as well as marketing (false advertising) issues. Product safety requires quality checks at every stage of production and sale.
Can a Small Business Be Sued for Product Liability?
Yes, a small business can be sued for product liability if a customer believes the product “harmed” them. That’s why every business (small, part-time, and online ones included) needs product liability insurance for support in case of product liability claims or lawsuits related to their goods.
Does Product Liability Only Apply to Manufacturers?
No, product liability does not apply only to manufacturers. Every business involved with designing, manufacturing, selling, shipping, and marketing products can be held liable for product-related claims. Product liability insurance is designed to protect these businesses in the event an issue arises from their work.
What Is the Difference Between Product Liability Insurance and a Product Recall?
Product liability insurance is coverage that helps with liability issues after a product is sold. A product recall is when a business withdraws a product from the market due to safety concerns, either voluntarily or as mandated. Product recall insurance is a specific protection designed to help cover the costs of removing a product from the market.
Learn more about product liability versus product recall insurance.
