Businesses involved in manufacturing, importing, distributing, wholesaling, labeling, or selling products may face a variety of liability exposures associated with products placed into the marketplace. Product liability insurance is commonly reviewed to help address certain financial exposures involving bodily injury or property damage arising from the use, handling, distribution, or alleged failure of a product.
Product-related exposures can vary significantly depending on the type of product involved, manufacturing processes, distribution methods, intended use, customer base, quality control procedures, and the overall operations of the business. Reviewing product liability coverage periodically may help identify areas that deserve additional consideration as operations and product lines evolve.
Product liability policies can also vary depending on product classifications, completed operations exposures, contractual insurance requirements, foreign manufacturing considerations, recall-related exposures, territorial limitations, and how the policy integrates with the broader liability structure of the business.
Questions to Consider About Product Liability Insurance
Product & Operational Considerations
• What types of products are being manufactured, imported, distributed, assembled, or sold
• Could product usage, installation, instructions, labeling, or warnings create liability exposures
• Are all products, operations, and distribution activities properly disclosed within the insurance structure
• Should changes in products, annual revenues, suppliers, manufacturing methods, or distribution channels be reviewed as part of the current insurance structure
Manufacturing & Supply Chain Considerations
• Are products manufactured internally, outsourced, imported, or distributed through third parties
• Could foreign suppliers, overseas manufacturers, or contract manufacturing arrangements create additional exposure considerations
• Are quality control procedures, supplier management practices, or product testing procedures reviewed periodically
• Could changes in raw materials, component parts, or sourcing arrangements affect liability exposures
Insurance Requirements Within Contracts
• Do vendor agreements, supplier agreements, retailer contracts, or distribution agreements contain specific insurance requirements
• Are additional insured requirements, evidence of insurance requirements, or minimum insurance limits being reviewed carefully
• Have the insurance sections of contracts been reviewed carefully before agreements are finalized
• Are certificates of insurance and product liability insurance requirements reviewed consistently
Coverage Structure & Policy Considerations
• Are there exclusions, limitations, classifications, or endorsements that should be reviewed carefully
• Could product recall exposures, completed operations limitations, foreign product exposures, or design-related exclusions create additional considerations
• Are territorial limitations or international sales exposures being reviewed carefully
• Is the policy being placed through a standard insurance market or a specialty insurance market
Claims & Business Continuity Considerations
• Could a significant product liability claim create financial strain or operational disruption
• Could allegations involving product defects, labeling, installation, or product failure affect customer relationships or ongoing operations
• Have claims reporting procedures and carrier communication processes been reviewed carefully
• Have carrier financial stability, claims handling practices, and coverage administration considerations been reviewed
Product liability insurance is commonly reviewed based on the products being manufactured or distributed, operational activities, supplier relationships, the insurance requirements contained within contracts, distribution methods, and the potential financial impact associated with product-related liability claims. Coverage terms, conditions, exclusions, classifications, limitations, and endorsements may vary depending on the policy structure and carrier involved.
At Insurance With Purpose Agency, Inc., we work with manufacturers, distributors, wholesalers, importers, and retailers to review product liability insurance options based on operational activities, product exposures, and the broader structure of the business insurance program.
Cost of Insurance Considerations
Insurance costs for product liability insurance can vary depending on the type of products involved, annual revenues, manufacturing processes, distribution methods, prior claims history, and the geographic territories where products are sold or distributed.
Additional factors such as foreign manufacturing exposures, product recall considerations, completed operations exposures, quality control procedures, contractual insurance requirements, and the nature of the end users of the product may also influence underwriting considerations and overall insurance costs.
Coverage structures, deductibles, policy limits, product classifications, territorial limitations, and carrier requirements may vary depending on the products involved and the insurance carrier providing coverage. Reviewing products, distribution activities, and operational exposures periodically may help identify changes that deserve additional consideration as the business evolves.
At Insurance With Purpose Agency, Inc., we work with manufacturers, distributors, wholesalers, importers, and retailers to review product liability insurance options based on operational activities, product exposures, contractual insurance requirements, and the broader structure of the business insurance program
If you would like to review how this coverage applies to your liability insurance program: Dominique Renaud, Insurance With Purpose Agency, Inc.
