Product Liability Insurance

What product liability insurance covers

Product liability insurance protects your business when a product you make, sell, distribute or import causes bodily injury or property damage. The injured person doesn't need to buy the product from you directly: anyone in the supply chain, from the manufacturer to the retailer, can be named in a lawsuit.

Claims usually fall into three types:

• Manufacturing defects. Something went wrong when the product was made, such as a contaminated batch or a cracked part.
• Design defects. The design itself is unsafe, even when made correctly.
• Failure to warn. Instructions or warning labels were missing, unclear or inaccurate.

The policy pays for legal defense, settlements and judgments, up to your limits. Product claims can involve several businesses and take a long time to resolve, so defense costs can be significant.

Example: An online store sells imported phone chargers. One overheats and damages a customer's desk and burns their hand. The customer sues the store along with the importer. The store's product liability coverage pays for its defense and its share of the settlement.

Example: A caterer serves a dish that leads to food poisoning at a wedding. Several guests file claims for medical bills. Food you serve is treated as a product, so product liability coverage responds.

Product liability and general liability

For many small businesses, product liability is already part of their general liability policy. Standard GL policies include coverage called products-completed operations, with its own aggregate limit. It covers:

• Products you make or sell, after they leave your hands.
• Completed operations: work you finished that later causes harm, like a deck that collapses months after a general contractor built it.

So the first step is to check your general liability policy. Businesses with higher product risk, such as manufacturers, importers, private-label sellers and food or supplement makers, may need higher limits, a separate product liability policy, or specialized coverage. Some insurers exclude certain product types entirely.

The phrase "public and product liability insurance" is common in some countries. In the U.S., the same protection usually comes from general liability (public liability) plus products-completed operations coverage.

What product liability doesn't cover

• Product recalls. The cost of pulling products off shelves usually needs separate recall insurance.
• Your own defective product. Replacing or repairing the faulty item itself is generally not covered.
• Your inventory and equipment. Those need property coverage, such as a business owner's policy.
• Purely financial disappointment. If a product just didn't perform as advertised, without injury or damage, that may not be covered.
• Intentional acts and known defects you ignored.

Who needs product liability insurance?

• Manufacturers and makers of physical goods, including handmade and craft sellers.
• Retailers and wholesalers, including online stores selling on their own site or on marketplaces.
• Importers and private-label sellers, who may be treated like the manufacturer.
• Food businesses, such as food trucks, restaurants and caterers.
• Beauty professionals who sell or apply products, like estheticians, hair stylists and nail technicians.
• Contractors, whose finished work counts under completed operations.

Retail chains, distributors and some online marketplaces may require sellers to carry product liability with specific limits and to name them as an additional insured.

How much does product liability insurance cost?

Product liability doesn't have a single published median in Insureon's 2026 data, because it is often included in general liability and the price depends heavily on the product. For context, Insureon's 2026 median cost of general liability, which often includes products coverage, is $45 a month ($538 a year), and the food and beverage industry median for GL is $44 a month. Dedicated product liability policies can cost much more for risky products.

What drives the price:

• Product type. Children's products, supplements, food, electrical items and anything consumed or applied to the body carry more risk.
• Sales volume and distribution. More units sold means more exposure.
• Where the product is made, and whether you can pass claims back to a U.S. supplier.
• Limits and deductibles.
• Quality control and claims history.

See how much does business insurance cost for other policy medians.

Limits and deductibles explained

General liability policies usually have a separate products-completed operations aggregate, often $2 million, which is the most the policy pays for all product and completed-work claims in a policy year. Per-occurrence limits (often $1 million) cap a single claim. Retailers may ask for higher limits, which you can reach with a larger policy or an umbrella. Dedicated product liability policies may have a deductible or self-insured retention that you pay toward each claim.

How to buy product liability insurance

Start by reading your current GL policy for products-completed operations coverage and any product exclusions. Then talk to a licensed agent or broker who works with product businesses. Be clear about what you sell, where it is made, how many units you sell and where you sell them. Ask about additional insured endorsements for retailers and marketplaces. Keep supplier contracts that require your suppliers to carry their own product liability and to name you as an additional insured.

How to reduce product liability risk

• Choose reliable suppliers and ask for their certificates of insurance.
• Test products and keep the results.
• Write clear instructions and warnings, and keep copies of every label version.
• Track batches or lot numbers so you can respond quickly to a problem.
• Follow safety rules that apply to your products, such as those published by the U.S. Consumer Product Safety Commission.
• Keep sales and complaint records, which help your defense and show insurers you manage risk.

Product liability for food businesses

Food is one of the most common sources of product claims for small businesses. Food poisoning, allergic reactions to unlabeled ingredients, and foreign objects in food can all lead to injury claims. Food trucks, caterers and restaurants should confirm that their general liability includes products coverage, label allergens clearly, follow local health department rules, and keep temperature and supplier records.