Product Liability Insurance Cost
Frequently Asked Questions
How much does product liability insurance cost?
Product liability insurance costs $500-$5,000/year for small businesses. Costs depend on: product type (low-risk products $500-$1,500, high-risk products $2,000-$10,000+), annual revenue, distribution channels, safety record, and coverage limits. Children's products and ingestibles typically cost the most.
What does product liability insurance cover?
Product liability insurance covers: claims that your product caused bodily injury, claims that your product caused property damage, manufacturing defects, design defects, failure to warn (inadequate instructions/labels), legal defense costs, settlements and judgments, and product recall expenses (with endorsement).
Who needs product liability insurance?
Any business that manufactures, distributes, sells, or imports physical products. This includes: manufacturers, wholesalers, retailers, Amazon/Etsy sellers, importers, and food producers. Even if you do not manufacture the product, you can be held liable in the distribution chain.
Is product liability included in general liability?
Some general liability policies include basic product liability coverage (products-completed operations). However, the coverage may be insufficient for businesses with significant product risk. Dedicated product liability policies provide higher limits and broader coverage. Review your GL policy to understand what is included.
What is a product recall and does insurance cover it?
A product recall is when a product is removed from the market due to safety defects. Standard product liability does not cover recall costs. You need a separate product recall insurance endorsement, which covers: consumer notification, product retrieval/destruction, replacement costs, and business interruption from the recall. Product recall coverage costs $2,000-$10,000+/year.