Understanding The Scope Of Product Liability Coverage

If your business produces or sells products, having some form of product liability coverage will be critical. This type of insurance protects your company if a defective item causes injuries to customers. 

Product liability encompasses many different types of products, from electronics to medicines and even clothes. But before signing up for a policy, you should understand what that policy covers, what may be left out, and how you can file a claim if your customers need compensation. Here is a brief overview of the scope of coverage for most product liability policies.   

Coverage for Product Flaws During Use 

Product liability provides coverage for many different types of design flaws. From a faulty battery in smartphones to a loose component in children's toys, manufacturers can be covered from costly claims. This policy is an excellent insurance cover in instances where a product malfunctions during use. It can also reduce financial risk if a design flaw results in issues with a specific batch of products. 

However, businesses should be aware that product liability may not apply in cases of negligence. If a manufacturer intentionally sells defective items, they shouldn't expect to receive compensation. Product liability also doesn't apply to employees who may be injured during the manufacturing process. Such injuries are covered under worker's compensation insurance. 

Manufacturer Defects 

Product liability insurance also covers manufacturer defects. Such defects occur during the actual manufacturing process, such as when the product is being assembled, packaged, or prepared for distribution.

Manufacturer defect coverage varies slightly from coverage for other flaws that occur during product use because it addresses issues that may arise even before the product has been sold. In this way, you can be sure that your product development process will proceed smoothly without significant financial loss. 


When manufacturing or selling potentially hazardous products, manufacturers are required to provide adequate usage information. There are cases where sellers don't place all the necessary warning information on product labels, resulting in injuries among consumers. 

Liability insurance covers instances where claims arise from insufficient product information. Whether a seller didn't inform customers of high voltage or issues arising from improper use, this policy will compensate the consumers who are affected. 

Other Injuries Arising From Proper Use 

There are other, less-common cases where consumers may have been injured by a product even when using it correctly. This is often referred to as strict liability, and the consumer can be compensated for such cases. Such coverage also protects your business from any significant financial loss that it would otherwise experience.  

Contact a business insurance company to learn more.