If you manufacture, distribute, or sell products, having the right coverage can save you from a hefty claim. Get a free product liability insurance quote with us today – no obligation required.
Product liability insurance is a crucial type of commercial insurance designed to protect your business from financial losses arising from claims related to the products you manufacture, distribute, or sell. If a product you provide causes injury to a customer or damages their property, this can help manage the costs associated with such incidents – covering items like legal fees, settlement bills, and medical expenses.
Other terms for product liability insurance
Product liability insurance may also be known as product risk insurance or product indemnity insurance. While these terms are often used interchangeably, be sure to double-check the exact coverages on your policy as each insurer may differ. Plus, some form of product liability coverage is typically included under a general liability insurance plan.
If your business is involved in manufacturing, distributing, or selling products, you should strongly consider having product liability insurance. This coverage is crucial for protecting your business from claims related to product defects that cause harm or damage. Here are a few examples of professions and industries that can significantly benefit from a product liability insurance policy:
ManufacturersBusinesses that produce goods can face significant liability if their products are defective or unsafe. Product liability insurance covers these risks, ensuring manufacturers are protected from costly claims.
Wholesalers & distributorsAs a middleman between manufacturers and retailers, you can be liable for defects found in the products you handle. Product liability insurance helps protect you from these potential claims.
Importing products from abroad can expose you to risks, especially if the products don’t meet local safety standards. Product liability insurance covers claims arising from any defects in the imported goods.
Selling products online means you could be held responsible for defects, even if you didn't make the products yourself. Product liability insurance is essential to shield your business from these risks.
In-store retailersPhysical retailers are accountable for the products they sell, such as appliances, clothing, and more. Product liability insurance is crucial for covering potential claims and providing peace of mind in your day-to-day operations.
Restaurants & food servicesWhether you run a restaurant or handle food distribution, there's a risk of facing claims due to food contamination or labelling issues. Product liability insurance helps protect your business from potential legal and financial consequences.
To understand the value of product liability insurance, it's helpful to look at a few specific examples of claims you could potentially face. Here, we outline three different liability incidents, along with how having the right coverage in place can protect your small business financially.
Kitchen appliance fireA kitchen appliance sold by a retailer has a wiring defect that causes it to overheat and start a fire in a customer’s home. Product liability insurance can cover the costs of repairing the damage to the home and any claims for compensation due to property loss or injury.
Contaminated foodA food processing company unintentionally contaminates a batch of its products, resulting in several customers becoming ill after consumption. Product liability insurance can help cover the medical bills for those affected and any legal claims brought against the company for the contamination.
Cosmetic skin reactionA cosmetic product manufacturer sells a new skincare cream that causes severe allergic reactions in some users. Product liability insurance can cover the cost of customer medical treatments and the legal defense costs if users sue the manufacturer for damages.
advertisementLooking for product liability coverage? We can help – get a free, customized quote with us today (no obligation required).
The cost of product liability insurance can vary based on the unique risks associated with your business and the products you handle. Typically, small to medium-sized businesses can expect to pay annual premiums ranging from $300 to $3,000 – or about $0.25 per $100 of retail sales (e.g. $1,250 for $500,000 in products). Keep in mind that these are general estimates, and the exact cost for your business may differ. Higher-risk industries with larger operations usually incur higher premiums due to their increased exposure to potential claims. To find the exact price you'll be paying, be sure to shop the market with us today.
If you have commercial general liability insurance, you may also already have some form of product liability coverage under it, so be sure to ask your insurer if it is included in your quote. Plus, you can also bundle product coverage with other types of business insurance – such as professional liability insurance, business interruption insurance, director's and officer's insurance, and cyber liability insurance – under one single policy. Consulting a licensed commercial insurance broker can help ensure your insurance package is customized to the unique needs of your business.
To better understand the quoting process, here are six different factors that impact the cost of your product liability insurance. Generally speaking, the more risk your business brings, the more you'll need to pay for its insurance.
Industry & product type Business size & revenue Claims history Coverage limits Safety measuresMost business insurance companies will include product liability under thei r general liability insurance, but some may offer it as a stand-alone policy. Be sure to speak with your insurance broker to clarify what’s included in your package to ensure you have all the coverage y ou need.
If you’re looking to protect your business with product liability insurance, take a few minutes to compare business insurance quotes with us. We’ll provide a quote and connect you with a licensed insurance broker in Canada who will help you finalize the coverage for your business as seamlessly as possible.
If your business sells, manufactures, or distributes products on an international level, be sure to inform your insurance broker as you may need more coverage. Also, be sure to verify the industry standards (e.g. label requirements) for your product in other countries to prevent liability claims as best as possible.
No, product liability insurance is not mandatory in most businesses industries. However, if your business offers any sort of product, you should consider it as one claim could cause immense financial trouble.
If you work with other businesses to sell, manufacture, or distribute your product, you could be required by another party to purchase products liability insurance. Also, ensure that the other parties (eg. supplier, manufacturer) have enough coverage and speak to your insurance brokers about listing each other on your policies – you wouldn’t want someone else’s mistake to become your financial responsibility.
No, if your business offers services instead of a physical product, product liability insurance will not cover you if a third party holds you liable for the service. Instead, pu rchasing professional liability insurance will protect you against claims of property damage or bodily injury resulting from your advice.
For instance, if you operate a gym that also sells merchandise, you should opt for a fitness insurance policy that includes both products liability insurance and professional liability insurance. Products liability insurance will protect you if a customer injures themselves using the equipment you sold them, while professional liability insurance will compensate for damages if a customer injures themselves because of a workout you led.
On the other hand, you may only need either one of product liability insurance or professional liability insurance. If you’re shopping for contractors insurance, and you build chairs for sale, product liability insurance would be the right coverage for your case. If you offer a service, such as construction management, you should opt for professional liability insurance instead.
In general a builder or contractor would not need product liability insurance. They would most like have builder's risk insurance or contractors insurance.
Product liability insurance is recommended for anyone who sells, manufactures, or distributes a product. Since a builder doesn't generally manufacture, sell, or distribute a product, this form of insurance is not necessary for them.
advertisement What’s on the pageWith 6+ years of experience at Ratehub.ca, Matt’s focus has been on growing its newest business unit, Insurance. He is a thought leader and a valuable resource to respected publications across Canada. read full bio
By submitting your email address, you acknowledge and agree to Ratehub.ca’s Terms of Use and Privacy Policy. Contact us for more information. You can unsubscribe at any time.
Disclaimer: Financial institutions pay us for connecting them with customers, including by paying for advertisements, clicks, or when someone applies for/is approved for a product. Terms and conditions apply between you and the provider of the product - please be sure to review them. Product information and details vary for Quebec. The content provided on our site is for information only; it is not meant to be relied on or used in lieu of advice from a professional. Partners/Advertisers are not responsible for the accuracy of information on our site. For complete and current information on any product, please visit the provider’s website. However, not all products we list are tied to compensation for us. Our industry-leading education centres and calculators are available 24/7, free of charge, and with no obligation to purchase. To learn more, visit our About us page.
Ontario Mortgage Brokerage #12530, Quebec Ratehub.ca Mortgage Brokerage Firm #3001931116 - Ratehub Inc. o/a Ratehub.ca & CanWise Financial is a licensed mortgage brokerage and CMHC-approved lender. CanWise Financial & CanWise Mortgages are owned and operated by Ratehub Inc. – All rights reserved.