What does products liability insurance primarily cover?

Products liability insurance is designed to provide coverage for claims made against a manufacturer, distributor, or retailer due to injuries or damages caused by defective goods that they have produced or sold. This type of insurance protects businesses from legal responsibilities that arise when their products fail to meet safety standards or are found to be hazardous in any way.

When a product is alleged to be defective, which could mean it is poorly designed, manufactured with flaws, or lacks adequate warnings regarding its use, the affected parties may pursue legal action against those associated with the product. Products liability insurance covers the associated legal costs and any settlements or judgments made against the insured party, thus ensuring that they are financially protected from potential claims arising from the use of their products.

In contrast, while recalling defective goods or losses incurred by incorrect professional advice are related to other areas of business liability and insurance, they are not typically covered under products liability insurance. Recall costs may be addressed through separate recall insurance policies, and injuries to employees are generally covered under workers' compensation insurance rather than products liability.