The Importance of Product Liability Insurance for Manufacturers

Manufacturers operate in a high-risk environment where product issues can surface long after items leave the factory. Product liability insurance may help businesses respond to claims efficiently and stay financially stable in the face of costly disputes.

Why Do Manufacturers Need Product Liability Insurance?

Manufacturing companies are responsible for the items they produce, from design to distribution. The manufacturer can be held legally liable if a product causes injury or damage. Product liability insurance may help cover the financial fallout of lawsuits or settlements arising from defective products. This coverage is critical for companies that produce, distribute or sell physical goods, regardless of size or industry.

What Does Product Liability Insurance Cover?

Standard product liability insurance may cover the following:

• Design defects—Flaws in a product’s original design that make it unsafe, such as a power tool without proper safety features.
• Manufacturing defects—Errors during production, such as a batch of contaminated food or a faulty brake system.
• Improper labeling or instructions—Failure to include warnings or usage directions. For example, not warning users about potential allergic reactions from ingredients.

Product liability insurance does not cover employee injuries, product recall expenses, intentional harm and contractual liability. It may also exclude claims from products not sold or distributed through approved channels.

Contact American Eagle Insurance & Tax Insurance today to learn how product liability insurance can help your business. Our team can help you explore options and secure the appropriate policy.

This blog is intended for informational and educational use only. It is not exhaustive and should not be construed as legal advice. Please contact your insurance professional for further information.