Product Liability Insurance

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What is Product Liability Insurance?

Product liability insurance (or Product Recall Insurance) protects your company from claims that a product you manufactured or sold caused physical harm or property damage to someone else's property.

Product Recall Insurance may be offered separately, or included as part of your General Liability Insurance.

Without product liability insurance, your business may be forced to pay for costly general liability claims connected to product faults out of your pocket.

What Product Liability Insurance Is All About:

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What Is Product Liability Insurance Coverage?

Product Recall Insurance is a first party, specialty policy that covers tampering, contamination, crisis management expenses and recall costs for the negative publicity that may ensue after a product is recalled. This coverage can supplement general liability or be purchased as a stand-alone policy.

This type of insurance will help you manage the negative fallout from a recall and provide you with a safety net as you work to repair your business reputation and regain the public’s trust and patronage. It’s important to keep in mind that a recall can happen through no fault of the company.

There are two types of this specialty Insurance: Voluntary and Involuntary. Many companies are opting for voluntary recall which means they don’t have to wait for the government to announce a mandatory recall. This minimizes the adverse effects that happen when the government steps in.

With a voluntary recall, the company is admitting its error. With involuntary recall, you take the risk of being negatively perceived by the public for not practicing due diligence, or worse, hiding the truth.

What Does Product Recall Insurance Cover?

Accidental Contamination

Example: A food product that is contaminated while in the production line because an ingredient was accidentally added causing consumers to get sick. Product Liability Insurance will cover the customer’s medical costs as well as the legal fees to defend your business in a claim.

Mistake in labeling

Example: Your product's label doesn’t give a customer enough warning of a possible allergy. Product recall insurance will cover the costs to treat the consequence of the customer's allergic reaction and legal fees for any claims they make against your business.

Accidental Product Defect

Example: Your products are recalled because of design flaws, causing an overheating or other malfunction of your product. Product liability insurance will cover the costs incurred as a result of the manufacturing defect that occured while the product was made.


Example: A malicious person deliberately sabotages or contaminates your product and then extorts money from you in exchange for not reporting the defect or contamination. Product recall insurance will cover the costs of extortion.

Malicious Tampering

Example: A disgruntled employee urinates on the production line causing severe damage to your company’s reputation and sales. The resulting costs and fees will be covered under Product Recall Insurance.

Government Recall

Example: The government steps in and orders the recall of your product because it is deemed to be unsafe for consumers. Product Liability Insurance will pick up the costs consequential to a government recall.

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How Much Does Product Liability Insurance Cost?

The cost of product recall insurance will depend on several factors such as:

  • Size of your business.
  • Number of products.
  • Extent of protection desired or mandated by state.

To find out how much it will cost you to get Product Liability Insurance, click on the orange button to get a free quote today.

Who is protected under product liability insurance?

  • Manufacturers

  • Retailers

  • Tradesmen

FAQs: Product Recall Insurance

When can you be sued for Product Liability?

Whether you are manufacturing a product or selling someone else’s you can be sued for product liability. Ultimately, you are responsible for the product if a customer is harmed by it regardless of your intention.

What are some claims examples for Product Liability Insurance?

There are many claims that are commonly seen in Product Liability insurance. Tylenol had a big claim back in 1982 when 7 people died because their pills had been tampered with and laced with cyanide. Kellog’s cereal had a big one where a disgruntled employee urinated in some cereal boxes and a video was posted online.

What is Product Guarantee Insurance?

Product Liability is there when a product issue causes injury or illness. Sometimes, a defect can happen that affects products but does not cause injury illness and this is where Product Guarantee insurance comes in. It covers the cost or repair or replacement of a defective product that causes failure to perform. This is usually due to faulty design or installation.

Does product liability insurance cover problems with software or app?

Software, programs, and other comparable IT and technical items are not covered by product liability insurance. To safeguard against coding errors and software faults, tech business owners should get an errors and omissions insurance (E&O) coverage.

Litigation arising from bodily injury caused by a product is covered by product liability insurance. It would, for example, protect you if your program caused a battery to explode, injuring someone.

Product liability insurance vs. general liability insurance: What's the difference?

These two policies are not the same, despite the fact that they are frequently purchased together.

General liability insurance protects a small business from the most typical types of claims. It covers things like a consumer stumbling in a puddle at your store and breaking their arm (or their phone). It also aids in the settlement of litigation alleging that you harmed a competitor's reputation or duplicated their logo.

Damages resulting from your products or finished services are covered by product liability insurance. Manufacturers, merchants, and contractors, for example, require both forms of insurance.

What Are the “Limits” on a Product Liability Insurance Policy?

The limits on Product Liability Insurance can vary but often are a part of the limits on a General Liability policy. The most common range from $500,000 - $5,000,000. The exact amount will depend on whether you decide to get basic coverage or opt for advanced coverage.

What Does Product Liability Insurance Not Cover?

Quality and performance issues This insurance does not usually cover quality and performance issues. A consumer cannot cause a product to be recalled based on dissatisfaction alone. It also does not cover waaranties.

Intentional violation Intentional violation of industry best practices or governmental regulations are not covered.

Losses Specifically losses involving a competitor’s product.

Third party liability Third party liability may not be accepted under Product Liability insurance.

Redesign costs May not always incorporate the costs of recall-related advertising or redesign costs

More coverage to compliment your product recall insurance

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