Solo Biz Soft Editorial Team If your business makes, sells, or distributes a physical product, product liability insurance covers claims that the product injured someone or damaged their property. It is usually sold as part of a general liability policy rather than as a completely separate product, which is good news for cost but can be confusing when you are trying to figure out what you actually have.
What it actually covers
Product liability coverage responds to claims that a product you made, sold or distributed caused injury or property damage, covering legal defense costs and settlements or judgments up to your policy limit. This applies at every point in the chain — manufacturers, distributors and retailers can all be named in a product liability claim, not just whoever physically made the item.
Why it is usually bundled, not separate
Most small businesses get product liability coverage automatically as part of a general liability policy rather than buying a standalone product liability policy, similar to how a business owner’s policy (BOP) bundles multiple coverages together. If you sell physical products, check your existing general liability policy’s declarations page before assuming you need to buy something new.
What drives the cost
The nature of the product matters enormously — a candle maker and a company selling exercise equipment face very different injury risk, even at similar revenue. Coverage limit, claims history, revenue and industry classification all factor in too. Average small-business costs commonly land around $40 to $125 a month, with higher-risk product categories running well above that range.
Who does not need this
A purely service-based business — consulting, writing, design, bookkeeping — that never sells a physical product generally has no exposure this coverage is built for. That kind of business is a better fit for professional liability, covered in general liability vs professional liability, instead.
Frequently asked questions
Do I need this if I just resell someone else's product?
Often yes. Distributors and retailers can be named in a product liability claim alongside the manufacturer, so reselling does not remove the exposure entirely.
Is this the same as professional liability insurance?
No. Product liability covers harm from a physical product; professional liability covers financial harm from advice, services or professional mistakes.
Can I get this coverage on its own without general liability?
It is possible with some insurers, but it is far more common, and usually cheaper, to get it bundled into a general liability or BOP policy.
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This article is general information, not insurance advice. Coverage and cost vary by provider, product type and location — get a quote from a licensed broker or insurer before buying any policy.