Product Liability For Small Business: What You Need To Know

What is product liability, and is it necessary for small businesses?

It depends on the nature of your business, but for most small businesses, product liability is critical insurance coverage.

Here’s everything you need to know about product liability for small businesses…

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Product Liability for Small Business

In most cases, product liability for small businesses is included under general liability in a standard Business Owners Policy or BOP.

Now for specific industries like manufacturing or e-commerce sales, depending on the specific business, Products, and Completed Operations, Liability insurance can be carved out. In this case, you will need to buy product liability separately.

Bodily injury and property damage is one form of liability on a General Liability policy. Then you also have Products and Completed Operations, which is separate liability coverage included under your General Liability Policy.

When you buy a General Liability Policy or a Business Owner’s Policy, if you’re a small business, you will get both product liability or products and completed operations insurance and bodily injury and property damage covered under the same limit.

Product Liability Coverage Limits

Standard product liability coverage limits are $1 million per occurrence and $2 million total annual aggregates.

You can bump that up to $2 million per occurrence, and $4 million total aggregates for the year, respectively, with most types of business.

However, regarding product liability, if you’re a manufacturer or selling something more unique or of a higher risk, sometimes some insurance carriers will carve out the product liability portion, and you must know that.

Now I will say in most cases; this doesn’t happen. So, most of you watching this do not have to worry about not having product liability. You most likely do have product liability if you have General Liability.

You have product liability as long as you see the bodily injury, property damage, and products-completed operations coverage in your insurance policy.

However, if it’s not there, say you have a package policy or buy all these policies individually versus buying them as one unit (a la a business owner’s policy). You can have situations where product liability isn’t included.

THIS MIGHT HELP: Frequently Asked Questioned About Commercial Insurance

How to Get Product Liability Insurance

All you need to do is ask your insurance professional,

“Does my business have products liability included?”

They should know immediately. If they don’t, they should be able to check and find out in short order. If they don’t know or you would like help with Product Liability, click here, and we will help you.

Product liability is a fairly standard coverage included with your broader General Liability Policy.

The Rub

The other day we were working with a client who designs bicycle frames and suspensions for bicycles. In this case, we got a general liability policy with just bodily injury and property damage to cover slips, trips and falls, and anything like that.

Then, we bought a separate Product Liability policy to cover the bicycle suspensions since that is a higher-risk type of product and it was a manufacturing business.

If you’re a bakery, you’re a shoe store, you’re a consultant, or you own an auto body shop, you’re going to see that products and completed operations are included with your bodily injury and property damage under General Liability.

I hope that helps you see the difference.

If this is the kind of relationship that you’d like with your agent or if your current insurance professional has never addressed these issues with you before, then I’d encourage you to reach out to us at Rogue Risk today.

I hope this article helped you better understand commercial general liability.

Thank you,

Ryan Hanley

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