What is "product liability insurance"?

Product liability insurance is designed to protect businesses from legal claims arising from injuries or damages caused by products they manufacture, distribute, or sell. This form of insurance provides coverage for various costs associated with lawsuits, including legal fees, settlements, and judgments. By having this insurance, businesses can safeguard their financial stability against claims that may result from defects in their products, inadequate instructions, or failure to warn consumers about potential risks.

For instance, if a consumer is injured due to a faulty product, they may file a lawsuit against the manufacturer or retailer. Product liability insurance would help cover the legal expenses and potential compensation owed to the injured party. This coverage is critical for companies that deal with physical goods, as even well-intentioned products can sometimes lead to unforeseen issues.

The other options focus on aspects that are distinct from product liability. Product recall expenses are typically covered under a different type of insurance that specifically relates to withdrawing a faulty product from the market. Loss of corporate profit involves a different kind of coverage related to business interruption or loss of income that does not specifically relate to the products themselves. Lastly, workplace accidents pertain to workers' compensation insurance, which deals with employee injuries rather than the liability associated with products sold to consumers.