Manufacturer
What Is a Manufacturer?
A manufacturer is a person or organization that produces a product, which is then sold or used by others.
Manufacturers often need a product liability insurance policy to work with retailers, markets, or events. This coverage is designed to pay for claims if a product they manufactured or branded causes harm to someone or damages their property after it has been sold or used.
It can cover expenses like the customer’s medical bills, property repair or replacement costs, and the manufacturer’s legal defense if their business is sued.
Why Do Manufacturers Need Product Liability Insurance?
Manufacturers need product liability insurance because anything they make can accidentally injure someone, damage property, or be recalled. The manufacturer is often one of the first parties named in a product liability claim.
Some common product liability risks for manufacturers include:
- A candle causes a small fire in a customer’s home
- A skincare product causes a rash or allergy
- A food or pet treat leads to an illness complaint
- A part or component you made fails and damages someone else’s product
Retailers and markets often require proof of insurance before they’ll sell a manufacturer’s products because of risks like these.
Product liability (often bundled alongside general liability in a manufacturer insurance policy) is designed to cover related costs so one bad batch, defect, or allergic reaction doesn’t wipe out the business.
What Is the Difference Between General and Product Liability Insurance for Manufacturers?
Even though general and product liability both cover the cost of third-party claims, they are triggered by different scenarios.
General liability responds to injuries or damage in or around your business, while product liability covers these claims when they are caused by your product.
Check out the other key differences between these two coverages below.
Swipe →
| General Liability | Product Liability | |
|---|---|---|
|
Core Purpose |
Third-party slips, trips, and property damage you cause while operating your business |
Injuries or damage caused by your product, after it leaves you |
|
Typical Claim |
Customer slips in your workshop, or you damage a venue’s floor |
Customer has a reaction to your skincare, or a packaged food product makes someone sick |
|
When It Applies |
During your normal operations or your work at a customer’s location |
After the product is sold, shipped, or installed (aka “completed operations”) |
|
Who Asks for It |
Landlords, events, and some commercial spaces |
Retailers, marketplaces, distributors, and many events/fairs |
|
Common Exclusions |
Product recall, product defect or failure, and professional services |
Known defects, intentional mislabeling, and excluded product types |
|
Main Business Risk Addressed |
Everyday business accidents |
Being named in a product-related illness or injury claim |
|
Why Manufacturers Need It |
Baseline protection to do business and get Certificates of Insurance (COIs) |
Protects you from claims related to your product |
Who Can Be Named In Product Defect-Related Lawsuits?
Anyone in the product’s chain can get pulled into a product defect lawsuit, not just the maker. This could include:
- The manufacturer (made the product or component)
- The importer (brought it into the U.S.)
- The wholesaler and/or distributor (moved it through the supply chain)
- The retailer/seller (sold or supplied it, even if they didn’t make it)
- The private label/brand owner (their name is on the product)
- The installer or assembler (if the defect was in how it was put together)
That’s why so many marketplaces, events, and retailers ask for proof of product liability insurance and to be added as additional insureds — they know they can be named, too.
Additional Resources
- Guide to Manufacturing Liability Insurance
- Learn more about Product Liability Insurance
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