How To Safeguard Your Company From Product Liability Claims


Owners of a company that manufactures products of any kind have a lot of things to worry about outside of their manufacturing business.

One of these that can be often overlooked is that of product liability and tort litigations. As per the law, if a product that causes harm or injuries to the consumer in any way, then the manufacturers and the sellers are liable towards compensating the buyer, user and even bystanders for any damages caused.

This means that the responsibility of the manufacturer and the owners of the company making any product does not end with them selling the product to the customer.

Product liability litigations, also called tort cases have seen lawyers sue the company for millions of dollars in damages.

So does this mean that there is no way for you to safeguard yourself against such events where your product might have caused some damage to your customer? Well, there is. One option of protection against potential claims comes from ensuring your company and product from any tort cases. This way, in an event of a mishap where the product of your company is found at fault, the compensation money shall be borne by the insurance company instead of it coming out of your pockets.

What Is Product Liability?

It is time that we discuss product liability in a bit more detail. As stated earlier, it is the liability of the manufacturers and sellers of a product that causes injury to the user or the bystander. The legal definition also talks of defects in the product due to which any injury might have come about.

However, in the real world, the courts have often provided huge compensations to the suing individual or party even when no particular fault in the design or manufacturing could be established. Product liability can be due to manufacturing defects, design defect or a marketing defect where the company fails to warn the user of any dangers.

The classical case of such a marketing failure is that of “Liebeck v. McDonald’s Restaurants”, where a lady Ms. Liebeck successfully sued McDonald’s for $2.86m after she spilled hot coffee on herself and received third-degree burns. The case has since become a classic in the American legal system for frivolous litigation and exorbitant amount of compensation claims. Such cases make it all the more important for you to have insurance and protect yourself from any similar litigation.

Some information about Product Liability Insurance

It should now be clear to you that product liability insurance is indeed important. Next question is where to find it. is one place where you can get a lot of answers. They are experts in protection against product liability claims and can help you in finding an ideal insurance company for you.

All you need to do is file in an application and they would give provide you with as many as 18 quotes from different insurance companies with competitive premiums. They also offer end-to-end services and help carry out Insurance coverage audit and contract review so that you can keep your worries at bay.

Factors to Consider When Buying Product Liability Insurance

When looking for product liability insurance, it’s not just about finding the right provider. There are various aspects to consider ensuring you have comprehensive coverage:

  1. Coverage Limit: This is the maximum amount an insurer will pay for a single claim or the total sum for all claims during the policy period. It’s essential to choose a limit that aligns with the perceived risk of your product.
  2. Exclusions: Some policies may not cover specific types of claims. Understand any exclusions upfront so you’re not caught off-guard later.
  3. Premiums: It’s vital to strike a balance between the premium and the coverage. While you may be inclined to opt for the cheapest premium, ensure it provides adequate coverage for potential risks.
  4. Deductible: This is the amount you’ll need to pay out-of-pocket for a claim before the insurance kicks in. Opt for a deductible that you can comfortably afford.

FAQ on Product Liability and Insurance

Q1: Why is product liability insurance important?
A1: Product liability insurance protects businesses from claims related to the manufacturing or sale of products, food, medicines, or other items to the public. It covers the manufacturer’s or seller’s liability for losses or injuries to a buyer, user, or bystander caused by a defect or malfunction of the product.

Q2: Is product liability insurance mandatory?
A2: It’s not universally mandatory, but many distributors and retailers may require their suppliers to have it. Regardless of the mandate, it’s beneficial for peace of mind and risk mitigation.

Q3: How is the premium calculated?
A3: The premium depends on various factors including the type of product, the volume of sales, and the company’s history of past claims.

Q4: Does the insurance cover recalls?
A4: Not all product liability insurance policies cover product recalls. Businesses may need to purchase an additional policy specifically for recalls or ensure it’s included in their existing policy.

Q5: Does product liability insurance only cover physical injuries?
A5: No, it also covers property damage and other forms of harm caused by a faulty product.


In the dynamic landscape of manufacturing and sales, product liability stands as a crucial area of concern for businesses. Given the potential for expensive litigation, companies cannot afford to overlook the risks. Investing in product liability insurance offers protection and peace of mind, ensuring that even in the face of unanticipated product issues, the financial wellbeing of the company remains secure. As with any insurance, it’s paramount to be well-informed and to choose a policy that aligns closely with the specific needs and risks of your business.

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