Businesses that manufacture, supply, or sell physical products face a distinct category of risk — the possibility that a product causes injury or property damage to a customer or third party. Product liability insurance addresses this risk, and understanding what it covers and when it is relevant helps founders make informed decisions about the insurance they need when their business involves physical goods.
Product liability insurance covers a business against claims arising from injury, illness, or property damage caused by a product it has manufactured, supplied, or sold. It applies whether the defect was caused by the business itself or existed further up the supply chain — if a customer is harmed by a product you sold, you may face a claim regardless of where the fault originated. Product liability cover is often included within a broader public liability policy, but the scope of cover should be confirmed.
Product liability risk varies considerably between product types — a business selling craft consumables has different exposure from one selling electrical equipment or children's goods. The level of cover required should reflect the realistic worst-case claims that the nature of the product could generate. Our guide to product liability insurance covers who needs it and how to assess the appropriate level for your business.