Product liability coverage is essential coverage for all businesses dealing with product manufacturing, wholesaling, and retailing. Products are of various kinds, and each product is entitled to its risks. Your product might cause several damages to different people. These damages can include product injuries, failure of performance, low-quality products, and many more losses to customers. The product liability laws are so strict that a manufacturer can be in trouble even if he had no way to prevent damage done by a product. In such a high-risk industry, the only resort for businesses is to purchase product liability coverage.  

product liability coverage

The cost of product liability claims 

As per the Markkula Center of Applied Ethics, product-related accidents lead to the death of approximately 34 million people every year. It is one of the significant causes of death among the people falling in the age group below 35. The cost of such incidents and injuries amount up to $12 billion each year. These are the statistics related to product-related injuries only. However, businesses face other losses related to product defects, quality defects, or safety hazards.  

The number of product injury lawsuits is increasing and causing massive losses to businesses. There are many cases where companies have filed for bankruptcy due to such claims. Product liability insurance becomes the only option when it comes to risk management for businesses dealing with products. Many companies have also failed to launch or pulled back well-performing products for fear of a product liability case. Therefore, the cost of product liability claims is enormous, and product liability coverage is necessary.  

Tips to minimize risk 

Product liability coverage is essential for businesses to survive the aftermath of a product liability lawsuit. However, purchasing a product liability coverage is not the only solution. Companies also need to focus on minimizing risk.  

A product with no defaults is a myth. Hence, companies need to focus on optimizing the outcomes in the best way possible. It will also minimize the risks and the premium of the product liability coverage. Here are some tips: 

Safety considerations: When you design a product, think of the worst-case scenario that might happen. Keep all the safety considerations in mind to minimize the risks of safety hazards. Harvard Business Review states a case where General Motors has to face a trial when a woman suffered an injury on a bus and said that the design of the bus was faulty. She claimed that the accident would not have happened if there was a handrail. Such design defect cases can be troubling and very expensive to fight. Hence, keep safety considerations in mind in the designing phase itself. 

Be careful while importing: If you are the importer of goods in the U.S., you are considered the manufacturer of the product and have the same liabilities as of the manufacturer. Hence, study the merchandise thoroughly before importing it. Such claims can also exceed your product liability coverage limit sometimes. 

Transfer your risks down the supply chain: With the smart use of documents, you can transfer the liability of products to the next member in the supply chain. However, you need to be ethical while doing so, and fraud is not acceptable. 

product liability coverage


Overall, product liability coverage is important for all businesses. You must know how to maintain records and minimize your risk. As a result, you can survive and flourish in your business.