Product Liability Insurance: Frequently Asked Questions

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woman comparing products in a store
Starting a worthwhile business and building it into something you’re proud of takes hard work. Sometimes you’re aware of everything you need to have in place in order to succeed in new retail spaces and sometimes you have to do some research. Did you know that one of the most commonly asked questions when starting a business is, “What insurance is my business required to have?” So don’t feel alone in not knowing everything about business requirements. One of the more confusing insurance requirements is product liability insurance, so to help clear things up for you, Insurance Canopy is helping answer the most frequently asked questions about product liability insurance. We’ll tell you what it is, what it does, how it could help, and why you need it. Plus, we’ll give you some insight into how pricing is determined. Let’s get started.


This type of insurance protects you against your product’s risk to consumers. If someone were to sue you as a result of your product causing harm, you could potentially be sued. This goes for businesses that are in any part of a supply chain—manufacturer, distributor, or retailer. As a member of the supply chain of any product, whether it’s in manufacturing, selling, distributing, or retail, you need to have coverage for the specific product in the supply chain. When you’re producing and selling products in a store–whether it’s your own physical storefront, an online storefront, or a third-party store you have a contract at–you need to ensure that you, the product, and anyone else involved are listed on a policy to prevent any fallout that could result from a lawsuit. If your product was found to have something wrong with it, be improperly labeled, or cause someone harm, you could be on the hook to pay extraordinary damages.


Product liability insurance would help if you were sued for producing or selling a product that was able to cause harm to an individual. This could be a skateboard that was not manufactured correctly disassembling upon use causing a child to fall and break a bone, to mislabeled food products that cause someone to have an allergic reaction. Carrying insurance gives you peace of mind that if you were sued as a result of your product’s harm to consumers then you would have coverage in place for expenses such as out-of-pocket legal fees, associated medical bills, loss of product, etc. Your insurance limits would pay out a covered loss


Yes! Insurance Canopy has worked with thousands of business owners to break into stores such as Target, Whole Foods, Ulta Beauty, Petco, Rite Aid, Amazon, Walmart, and countless others, both online and storefront. More recently, Insurance Canopy has designated a product liability insurance policy specific to Amazon sellers. Learn more about Amazon Sellers Insurance today.


The cost of your specific policy will vary based on a few factors, such as industry, sales revenue, your organization’s size, and more. Licensed agents can assess your risks and create a customized insurance policy that fits your small business needs.


These days, you can purchase product liability insurance from a number of insurance companies. When making your choice, be sure to go with one that has been in the industry long enough to streamline their process, offers A+ rated coverage from top carriers, and can cater to a myriad of products in the product liability space–just like Insurance Canopy.


Purchasing product liability insurance is one of the best ways to protect your business. No matter what you sell, you could be held liable for issues that could arise from your products’ exposure to the market and you could be sued as a result. One lawsuit could cost thousands in out-of-pocket fees and without the proper insurance in place, you could face a hefty loss. If you’re on the fence about purchasing product liability insurance for your business, don’t wait. You could be at risk right now. Do some research before buying a policy but know that without it you could be sued and face it alone.

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