Any business that makes, distributes, or sells a physical product carries a specific risk: that the product will later be blamed for injuring someone or damaging property. Product liability insurance covers the claims that follow, and the exposure runs along the whole supply chain, not just the manufacturer.
Product liability coverage responds to claims that a product was defective or unreasonably dangerous and caused bodily injury or property damage, whether through a manufacturing flaw, a design defect, or inadequate warnings and instructions. It covers the defense costs and covered damages, which in serious cases can be very large, particularly where an injury is severe.
A common misconception is that only the manufacturer is liable. In practice, an injured party may pursue everyone in the chain, the manufacturer, distributor, and retailer, so businesses at each stage carry exposure. That is why supply agreements often require partners to hold product liability coverage and to add each other as additional insureds.
Coverage is frequently part of a general liability policy but should be sized to the specific product risk, higher for products that can cause serious harm. Businesses that import or private-label products often bear more exposure than they realize, since the party marketing a product can be treated like its maker. Matching coverage to the real product risk is the task.
Make it or sell it, and you can be blamed for it.
This is general information, not personalized insurance advice. Coverage terms, definitions, and availability vary by policy and provider.