Product Liability

One mistake can derail your whole operation.
So why take the risk?

What is Product Liability Insurance?

As a business owner, you are responsible for every product you make or sell. If one of those products is faulty, or causes some sort of injury, you may get tangled up in lawsuits and your business may be held accountable for the consequences that could follow. These costs can rack up even if you may be proven innocent. Hence, a product liability policy can incrementally minimize the risk and costs you may face.

What does Product Liability Insurance cover?

Common issues businesses may encounter resulting in product liability claims include:

  • Products that cause bodily injury to the customer
  • Products that cause third party damage
  • Products (most commonly Food and Beverage) that causes sickness

The common issues for these reasons include:

  • Design defect: Unsafe or faulty design can lead to design defects
  • Manufacturing defect: Issues such as mistakes during assembly processing or a missing piece
  • Marketing defect: Incorrect labeling, lack of safety warnings or unclear instructions

In terms of costs, the following can be mitigated with a PL policy:

  • Medical costs for injury
  • Legal fees
  • Defence costs
  • Settlements made against your business

Policies are usually "claims made". Claims made policies cover claims brought against the insured during the policy period, even though the damage occurred was before the policy was in effect, but after the retroactive period which is stated in the policy. A less common policy is called "occurrences" policies. An occurrence policy covers claims arising from damage caused during the policy period no matter when the claim is filed. Claims filed many years after the policy has expired may be covered as long as the damage while the policy was in effect.

How important is Product Liability Insurance?

A product defect or a contaminated product may lead to a slew of unfortunate consequences. You could be at risk of causing injuries, illnesses or damage to someone else's property. Should you get sued, your product liability coverage can save you from medical costs, legal fees, defence costs and settlements made against your business. In some cases, without coverage, certain businesses would not be able to come back from such hardships.

Who needs Product Liability Insurance?

If your business sells products to another stakeholder, then having product liability insurance can massively decrease the potential costs you may face. No matter what stage of the supply chain your business is in, product liability can be extremely helpful, as it can benefit producers, manufacturers, retailers, wholesalers and distributors.

How much does a Product Liability Insurance policy cost?

The following factors are taken into consideration when determining the cost of your product liability insurance policy:

  • Industry
  • Location
  • Claims history
  • Policy limits

It should also be noted that Product Liability Insurance is commonly bought with Public Liability Insurance, as the added cost is minimum but the increase in mitigating risk is much more.


At CHAZ, with over half a decade of experience, we understand the risks associated with various types of products and can utitlize our extensive relationship with numerous insurers to our clients advantage. Not only can we negotiate a feasible price, we can also handle tedious claims so your mind can rest at ease.

Important Disclosure

The content provided is for informational and educational purposes only. The coverage written may change without notice and may not be applicable to all situations and policies. Terms, conditions and qualifications are also subject to circumstance, supplementary material and underwriting. CHAZ Insurance Brokers Ltd. is not liable for any discrepencies should there be any. For more information, please contact us via the enquiry form below.

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