Product liability insurance helps protect businesses when a product they sell, distribute, or manufacture causes injury or property damage. Coverage depends on how the product is used, how the claim arises, and the specific policy terms. In our years of professional service working with businesses in Hickory, NC, we’ve seen how understanding these protections ahead of time can prevent costly surprises after a claim.

Why Product Liability Insurance Matters for Businesses

Any business that places a product into the stream of commerce faces product-related risk. This applies not only to manufacturers, but also to wholesalers, distributors, retailers, and importers.

Even when a business did nothing intentionally wrong, it can still be named in a lawsuit.Product liability insurance exists to help manage that risk by covering legal defense costs and potential settlements related to covered claims.

What Product Liability Insurance Is Designed to Cover

Product liability insurance generally applies when a product causes bodily injury or property damage after it has left your control.

Core Protections Typically Included

• Product liability coverage may help with:
• Legal defense costs
• Court judgments or settlements
• Medical expenses for injured parties
• Property damage caused by a product

Coverage usually applies whether the claim is valid or not, as long as it falls within the policy terms.

The Three Main Types of Product Liability Claims

Most product-related lawsuits fall into one of three categories.

Manufacturing Defects

These claims arise when:

• A product is flawed due to an error in production
• A batch of products is improperly assembled
• Materials used are defective

Even if most products are safe, one defective unit can trigger a claim.

Design Defects

Design defect claims allege that:

• The product’s design is inherently unsafe
• Risks outweigh the intended benefits
• Safer alternative designs were available

These claims can be particularly costly because they may affect an entire product line.

Failure to Warn or Inadequate Instructions

These claims occur when:

• Instructions are unclear or incomplete
• Warning labels are missing or insufficient
• Known risks are not properly disclosed

Many product liability claims stem from how a product is presented rather than how it is built.

What Product Liability Insurance Typically Does NOT Cover

Understanding exclusions is just as important as knowing what’s covered.

Common Product Liability Exclusions

Policies often exclude:

• Intentional wrongdoing or fraud
• Product recalls (unless separately insured)
• Damage to your own product
• Contractual liability beyond standard tort claims

Some exclusions can be addressed with endorsements, but many are standard across policies.

Who Is Protected by Product Liability Insurance?

Coverage usually extends beyond just the business owner.

Parties Commonly Covered

Product liability insurance may protect:

• The business entity
• Employees acting within their job duties
• Officers and directors (depending on policy structure)

This shared protection is critical when multiple parties are named in a lawsuit.

Retailers and Product Liability: Why You’re Still at Risk

Retailers are often surprised to learn they can be sued for product defects.

Why Retailers Are Named in Claims

Retailers may be included because:

• They sold the product directly to the consumer
• They are easier to locate than foreign manufacturers
• Plaintiffs name all parties in the supply chain

Even if the manufacturer is at fault, legal defense costs can still fall on the retailer without coverage.

Product Liability vs. General Liability

Product liability is often included within a general liability policy—but not always at adequate levels.

Key Differences to Understand

General liability typically covers:

• Premises-related injuries
• Advertising injury
• Product-related injury claims

However, high-risk products may require higher limits or separate policies.

Product Recalls and Why They’re Usually Excluded

Product recalls create significant financial exposure.

Why Recall Coverage Is Separate

Recall costs often include:

• Notifying customers
• Pulling products from shelves
• Replacing or repairing products
• Lost revenue

These expenses are usually excluded unless recall insurance is purchased separately.

How Policy Limits Impact Real Claims

Product liability claims can escalate quickly.

Why Adequate Limits Matter

Claims involving:

• Serious bodily injury
• Children or vulnerable individuals
• Long-term medical treatment

Can exceed minimum policy limits, leaving businesses exposed to out-of-pocket costs.

Local Business Considerations and Product Exposure

Local business environments influence exposure.

Businesses operating near busy commercial corridors, retail centers, or areas with heavy foot traffic face increased interaction with consumers. These conditions heighten product liability risk for businesses serving customers throughout Hickory, NC, especially those selling consumer goods or equipment.

Common Product Liability Mistakes Businesses Make

Many claims issues stem from preventable oversights.

Mistakes We Frequently See

• Assuming manufacturers bear all responsibility
• Carrying low liability limits
• Overlooking warning label requirements
• Failing to disclose product changes to insurers

In our professional experience, these mistakes often surface during litigation.

How Product Changes Can Affect Coverage

Small changes can have big consequences.

Examples That May Impact Coverage

• Switching suppliers or materials
• Altering packaging or instructions
• Rebranding private-label products

Insurers should be notified of material changes to avoid coverage disputes.

When Product Liability Coverage Should Be Reviewed

Coverage should evolve with your business.

Times to Reevaluate Coverage

It’s important to review product liability insurance when:

• Launching new products
• Expanding distribution channels
• Entering online sales markets
• Increasing production volume

Businesses in Hickory, NC that conduct regular reviews are better positioned to handle claims efficiently.

How Claims Typically Unfold

Understanding the claim process helps set expectations.

What Happens After a Product Claim

Claims often involve:

• Investigation into the alleged defect
• Review of instructions and warnings
• Expert analysis
• Legal defense coordination

Product liability insurance helps manage these complexities from start to finish.

Why Product Liability Insurance Is a Business Safeguard

Product liability claims can threaten a company’s financial stability, reputation, and future growth. The right coverage doesn’t just protect against lawsuits—it provides confidence to operate, innovate, and sell products responsibly.

At Freedom Insurance Group, Inc., we aim to provide comprehensive insurance policies that make your life easier. We want to help you get insurance that fits your needs. You can get additional information about our products and services by calling our agency at 828-322-7474. Get a free quote today by CLICKING HERE.

Freedom Insurance Group, Inc.

 Address: Hickory, NC

 Phone: 828-322-7474

 Website: https://www.freedominsurancenc...