Also known as: Products Liability Insurance · Product Liability
Coverage that protects your business when a product you make, sell, or distribute causes bodily injury or property damage to a third party.
Product liability insurance pays for legal defense, settlements, and judgments when someone is harmed by a product your company manufactured, sold, or supplied. It responds to claims of a manufacturing defect, a design defect, or a failure to warn (inadequate instructions or safety labeling). For most businesses it is provided under the products-completed operations portion of a General Liability (CGL) policy, though high-risk manufacturers often buy higher dedicated limits.
It covers third-party claims that your product caused bodily injury or property damage, across three main defect types: manufacturing defects (something went wrong in production), design defects (the product is inherently unsafe as designed), and failure to warn (missing or inadequate safety instructions or labels). Coverage typically includes legal defense costs plus any settlement or judgment, up to your policy limits.
Product liability is usually a component of a General Liability (CGL) policy — specifically the "products-completed operations" coverage — rather than a separate policy for most businesses. General Liability covers a broader set of third-party risks (like a visitor slipping at your office), while the product liability portion responds specifically to harm caused by your products after they leave your control.
Any business in the chain of a physical product — manufacturers, distributors, wholesalers, importers, and retailers — needs product liability coverage. This includes hardware startups, consumer-goods brands, food and beverage companies, and e-commerce sellers, even if a third party actually manufactures the product. Software-only companies generally rely on Tech E&O instead, since their exposure is financial rather than physical.
Definitions are educational and may be modified by your specific policy language, endorsements, and state rules. For regulatory guidance, refer to the California Department of Insurance or the NAIC.
Last updated: July 2026.