Product liability exposure exists wherever a business puts a physical product into commerce — manufacturers, retailers, food vendors, crafters. The gap usually isn't a missing policy. It's the assumption that coverage is adequate.
A general liability policy covers a lot. But when a claim involves a product your client made, distributed, or sold — and that product caused bodily injury or property damage — the relevant coverage is product liability.
Most commercial general liability (CGL) policies include product liability as a coverage part, so for many clients it is already there. The gap usually is not a missing policy — it is the assumption that existing coverage is adequate, or that it applies to situations where it may not.
Who This Affects
Product liability exposure exists wherever a business puts a physical product into commerce. That includes manufacturers, distributors, wholesalers, and retailers. It also includes cottage industry operations — a client who makes and sells food products at farmers markets, a craftsperson selling goods online, a small manufacturer of physical goods — all carry product liability exposure even if they do not think of themselves as a product company.
The exposure follows the product, not just the transaction. A business that sold a product years ago can still face a claim if that product later causes harm.
Where the Gaps Are
Coverage limits are the most common issue. A small business with a CGL policy and growing product sales may be underinsured relative to the actual exposure. Product liability claims can involve medical costs, lost wages, and damages across multiple claimants — and limits that seemed adequate at policy inception may not reflect what the business has grown into.
Product recall is a related but separate exposure. CGL policies generally do not cover the cost to recall a defective product — only claims arising from harm the product actually caused. A business that voluntarily recalls a product to prevent harm may bear that cost entirely out of pocket unless a specific product recall policy is in place.
The Vendor Endorsement Issue
Some businesses that supply products to larger retailers are required to add those retailers as additional insureds under their CGL policy. This is typically a vendor endorsement — it extends the insured's coverage to the retailer for product liability claims.
Clients who supply to national or regional retailers should have this reviewed. Missing endorsements can create contract compliance issues well before a claim occurs, and some retailers will not pay invoices until the endorsement is confirmed on file.
The Conversation
For any client whose business involves a physical product — whether they manufacture it, import it, distribute it, or sell it at retail — product liability deserves a dedicated look during the coverage review. The question is not just whether coverage exists, but whether the limits reflect the scale and nature of what the business actually sells.
A client who started selling a product as a side venture and has since grown it into a primary revenue stream is worth revisiting. Their coverage may have been set when the exposure was small.