Product Liability Insurance for New York Businesses
Comprehensive coverage for businesses involved in product manufacturing, distribution, and sales
Why Product Liability Coverage Is Essential
Under strict liability laws, any business in the product supply chain—from manufacturer to retailer—can be held responsible for injuries caused by defective products, even without proof of negligence. A single product liability lawsuit can result in six or seven-figure judgments that could bankrupt an uninsured business.
Protect Your Business From Product Claims
Coverage tailored to your specific products and risk profile.
Every product that leaves your facility or sits on your shelves carries potential liability. Whether you manufacture, distribute, import, or retail products, a defect—real or alleged—can result in lawsuits claiming bodily injury or property damage. Even if your product is perfectly safe, defending against a frivolous claim can cost tens of thousands of dollars.
Product liability insurance protects your New York business against these claims, covering legal defense costs, settlements, and judgments. The Stan Steele Agency helps businesses across the product supply chain find comprehensive coverage tailored to their specific products and risk exposure.
What Is Product Liability Insurance?
Product liability insurance is a type of business insurance that protects companies against claims arising from injuries or property damage caused by products they manufacture, distribute, or sell. This coverage is typically included as part of a Commercial General Liability (CGL) policy under the "products-completed operations" section, though businesses with significant product exposure often need additional coverage.
The coverage protects against claims that a product was:
- •Defective in manufacturing: A flaw in a specific product during production
- •Defective in design: An inherent flaw affecting all units of the product
- •Defective in marketing: Inadequate warnings, instructions, or safety information
- •Unreasonably dangerous: Posing risks beyond what consumers would expect
The key distinction from premises liability: product liability covers injuries that occur after the product leaves your control—when it's in the hands of consumers or other businesses.
Products-Completed Operations Coverage
This CGL coverage section protects against:
- Products you manufacture
- Products you sell or distribute
- Work you've completed
- Injuries occurring off-premises
Note: Standard CGL policies may have inadequate product liability limits. Consider standalone product liability policies for higher coverage.
Who Needs Product Liability Insurance?
Under strict product liability laws, every business in the product supply chain can be held responsible for injuries caused by defective products—even if they didn't cause the defect. This includes:
Manufacturers
- • Original equipment manufacturers
- • Component part manufacturers
- • Food and beverage producers
- • Electronics manufacturers
- • Pharmaceutical companies
- • Cosmetics manufacturers
Distributors & Wholesalers
- • Product distributors
- • Wholesale suppliers
- • Drop-shippers
- • Fulfillment centers
- • Supply chain intermediaries
- • Logistics companies handling products
Retailers & Sellers
- • Brick-and-mortar retail stores
- • E-commerce businesses
- • Amazon/marketplace sellers
- • Specialty shops
- • Department stores
- • Consignment shops
Importers
- • Foreign product importers
- • International sourcing companies
- • Trading companies
- • Import/export businesses
- • Global supply chain managers
- • Customs brokers handling goods
Private Label Companies
- • Store brand products
- • White label products
- • Contract packaging
- • Branded resellers
- • OEM rebranders
- • House brand developers
Service Providers
- • Installers using products
- • Repair technicians
- • Assembly services
- • Product modification services
- • Refurbishers
- • Repackagers
Strict Liability Warning: You can be held liable for product defects even if you had no involvement in the product's design or manufacturing. Retailers who simply sell a defective product can face lawsuits, as can importers who had no control over foreign manufacturing. This is why coverage is essential for everyone in the supply chain.
What Product Liability Insurance Covers
Typically Covered
- Bodily injury claims
Medical expenses, lost wages, pain and suffering from product-related injuries
- Property damage claims
Damage to third-party property caused by your product
- Legal defense costs
Attorney fees, court costs, expert witnesses—even for frivolous claims
- Settlements and judgments
Amounts you're legally obligated to pay for covered claims
- Manufacturing defects
Claims arising from flaws in specific product units
- Design defects
Claims that the product design itself is dangerous
Common Exclusions
- Product recall costs
Expenses for recalling defective products (requires separate coverage)
- Intentional defects
Known defects you deliberately failed to correct
- Warranty claims
Product failures without bodily injury or property damage
- Your own property damage
Damage to your own property or products
- Product failure/repair costs
Replacing or repairing defective products
- Contractual liability assumed
Liability beyond what you'd have without a contract
Types of Product Defects
Product liability claims typically fall into three categories. Your coverage protects against all three types of defect claims:
Manufacturing Defects
A flaw that occurs during production, affecting individual units rather than the entire product line.
Example: A batch of car tires manufactured with weak sidewalls due to a machine malfunction during one production run.
Design Defects
An inherent flaw in the product's design that makes all units of that product potentially dangerous.
Example: A space heater designed with inadequate tip-over protection that creates fire risk in every unit produced.
Marketing Defects
Failure to provide adequate warnings, instructions, or safety information about product risks.
Example: A medication that doesn't warn about dangerous interactions with common over-the-counter drugs.
How Much Does Product Liability Insurance Cost?
Product liability insurance costs vary significantly based on your product type, sales volume, and risk factors:
Typical Cost Ranges:
Key Factors Affecting Your Premium
- •Product type: High-risk products (children's items, food, medical devices) cost more
- •Annual sales/revenue: Higher volume means more exposure
- •Claims history: Past claims significantly increase rates
- •Supply chain position: Manufacturers often pay more than retailers
- •Coverage limits: Higher limits mean higher premiums
- •Quality control: Strong QC programs may lower rates
- •Import status: Imported products may face higher rates
- •Target market: Products for children or vulnerable populations cost more
Ways to Reduce Product Liability Premiums:
- ✓ Implement robust quality control and testing programs
- ✓ Document all safety testing and compliance certifications
- ✓ Maintain clear warning labels and instruction manuals
- ✓ Choose higher deductibles if cash flow allows
- ✓ Bundle with other commercial insurance policies
- ✓ Work with an agent who understands your specific products
Get Product Liability Coverage Tailored to Your Business
We work with carriers who understand your industry. Free quotes, no obligation.
Industry-Specific Product Liability Considerations
Food & Beverage Products
Food manufacturers face unique risks including contamination, allergen labeling, and spoilage claims. FDA and USDA compliance documentation is essential.
- • Consider product recall coverage for contamination events
- • Document HACCP compliance and food safety certifications
- • Allergen labeling is critical for liability protection
Children's Products
Products designed for children face intense scrutiny and higher liability exposure. CPSC compliance is mandatory.
- • Ensure CPSIA compliance for all children's products
- • Age-appropriate warnings are legally required
- • Lead and phthalate testing documentation is essential
Electronics & Technology
Electronics face risks from fire, electrical shock, and battery failures. UL certification can reduce premiums.
- • UL, CE, or other safety certifications are valuable
- • Battery products require specific coverage considerations
- • Software defects may require additional coverage
Cosmetics & Personal Care
Skin reactions and allergic responses are common claims. Ingredient disclosure and testing are critical.
- • Patch testing and safety documentation reduce exposure
- • Clear ingredient labeling is essential
- • Consider product recall coverage for contamination
E-Commerce & Amazon Sellers
Online sellers face unique challenges including liability for products made by others and platform insurance requirements.
- • Amazon and other platforms may require proof of coverage
- • Even resellers can be held strictly liable
- • Document supplier relationships and hold-harmless agreements
Product Recall Insurance: A Critical Addition
Important: Standard product liability insurance does NOT cover the cost of recalling defective products from the market. Product recall insurance is a separate coverage that pays for:
- ✓ Customer notification costs
- ✓ Shipping and handling to retrieve products
- ✓ Destruction or repair of recalled products
- ✓ Replacement product costs
- ✓ Business interruption losses
- ✓ Third-party recall consultants
- ✓ Crisis management and PR
- ✓ Lost profits during recall period
The average product recall costs between $250,000 and $10 million. For food products, recalls can be even more expensive due to perishability and health risks.
Choosing the Right Coverage Limits
Limits shown as Per Occurrence / Aggregate. Many vendor contracts require minimum $1M/$2M limits.
Consider an Umbrella Policy
For businesses with significant product liability exposure, an umbrella policy can provide additional limits above your primary product liability coverage. This is often more cost-effective than increasing primary limits for the same amount of protection.
Frequently Asked Questions
What is product liability insurance?
Product liability insurance protects businesses against claims arising from injuries or property damage caused by products they manufacture, distribute, or sell. It covers legal defense costs, settlements, and judgments when consumers or businesses claim a product was defective or dangerous.
Who needs product liability insurance?
Any business involved in the product supply chain needs product liability coverage, including manufacturers, assemblers, distributors, wholesalers, retailers, importers, and even businesses that put their label on products made by others (private label). If a product you touch injures someone, you can be held liable.
How much does product liability insurance cost?
Product liability insurance typically costs between $500 and $15,000+ per year, depending on product type, annual sales volume, claims history, and coverage limits. High-risk products like children's items, food, or electronics typically have higher premiums than low-risk products.
What types of product defects are covered?
Product liability insurance typically covers three types of defects: manufacturing defects (flaws in individual products), design defects (inherent problems with the product design affecting all units), and marketing defects (inadequate warnings, instructions, or safety information).
Does general liability insurance cover product liability?
Standard Commercial General Liability (CGL) policies include limited products-completed operations coverage. However, businesses with significant product exposure often need additional standalone product liability policies or higher limits to adequately protect against claims.
What is product recall insurance?
Product recall insurance covers the costs of withdrawing a defective product from the market, including notification expenses, shipping and disposal costs, replacement products, and business interruption losses. Standard product liability policies typically exclude recall costs.
Related Business Coverage
Product liability is one component of comprehensive business protection. Consider these complementary coverages:
General Liability
Covers premises liability and operations—complementary to product liability.
Commercial Umbrella
Additional limits above product liability for catastrophic claims.
Commercial Property
Protects your inventory, equipment, and manufacturing facilities.
Business Interruption
Covers lost income when your operations are disrupted.
Important Information
This information is provided for educational purposes only and does not constitute legal or insurance advice. Coverage features, exclusions, and availability vary by state, carrier, and individual circumstances.
All coverage is subject to policy terms, conditions, and exclusions. Please review your policy carefully and consult with a licensed insurance professional to determine appropriate coverage for your specific products and situation.
The Stan Steele Agency is licensed to conduct business in New York State. License information available upon request.
Protect Your Products and Your Business
Don't let a product liability claim threaten your business. Get comprehensive coverage tailored to your specific products and risk exposure with expert guidance from Stan Steele Agency.
Why Work With Us:
- ✓ Free, no-obligation quotes
- ✓ Carriers who understand your industry
- ✓ Standalone and package policy options
- ✓ Product recall coverage available
- ✓ Help meeting vendor contract requirements
Serving NY businesses since 1969 • Multiple carrier options
