Product Liability Insurance

What Does Product Liability Insurance Mean?

Product liability insurance, also known as products-completed operations insurance, is a policy that covers damages or injuries caused by a product sold by the policyholder. It can also cover legal fees arising from lawsuits against the policyholder due to their product.

Insuranceopedia Explains Product Liability Insurance

A product liability policy covers three main areas:

• Defects arising from the production or manufacturing process
• Defects in product design
• Inadequate or faulty product information

This policy provides financial compensation to the affected client or customer and offers financial assistance if the seller or manufacturer becomes involved in legal proceedings.

Many small businesses bundle product liability with broader coverage by purchasing a Business Owner’s Policy, which packages property and liability protections together. Sellers and manufacturers who want wider protection against customer injury claims often pair it with general liability insurance, since the two cover different but related types of risk.