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Product Liability Insurance: 5 Types of Protective Coverage

If you are a manufacturer, distributor, supplier, retailer or any other entity that makes products accessible to the populace, you are at risk of liability in the event of a related error.

The following forms of coverage can protect from a liability claim and lawsuit.

1. Product Tampering Insurance

Though a company or store may not be the culprit in a tampering incident, they can be liable for it. This insurance covers the risk of another person corrupting a product or warning of tampering intentions. 

The insurance includes losses, such as:

  • Required elimination of the tampered product
  • Loss of profits
  • Product recall costs
  • Product restoration costs

Coverage excludes 3rd-party liability, as well as blackmail expenditures.

2. Product Warranty Inefficiency Insurance

A specialty surety or warranty form of coverage, this policy was initially prepared for investors or manufacturers of alternate energy supplies by shielding them from fiscal loss in the event of performance failure. Currently, it protects the investor and manufacturer of other products as well. 

3. Hazardous/New Products Liability Insurance

Some types of factory-made products are prone to hazard liability. 

This includes:

  • Drugs
  • Cosmetics
  • Chemicals
  • Ladders
  • Others

Generally, it is the specialty insurance market that will insure a hazardous liability product.

4. Products Liability-Retroactive Insurance

This type of policy transfers a claims-made form to that of occurrence coverage.

RELATED: how physicians can extend a professional liability insurance policy

Customized plans can present coverage for specific retroactive timespans, all-inclusive occurrence protection dating back to the initial claims-made date of effectiveness, or continuing occurrence form that incorporates insurance protection for any previous action. Alternatively, the policyholder can utilize a plan that stretches out the discovery timespan of the non-renewed claims-made basis to a definite or indefinite amount of years.

 This type of coverage provides more expense protection than the standard liability coverage. It is used to shield a policyholder from the considerable direct costs associated with a product recall.

5. Product Recall Expenses Insurance 

Related recall costs can include:

  • Communications expenditures
  • Shipping expenses
  • Media announcement rates
  • Extra staff member pay
  • Overtime pay
  • Product destruction costs

For more on related insurance information, speak to an experienced independent insurance agent.

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Summary: If you are a product manufacturer, investor, distributor or retailer, you face specific liability in regard to the merchandise. Learn what your distinct insurance options are.


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