With the rapid growth of the eCommerce business, especially in this pandemic era, many business owners have set up shop online. However, in their haste to capitalize on this digital marketplace, many overlook the importance of product liability insurance coverage. 

In this blog, TX Insurance Quotes will explain the importance and benefits of product liability in small business insurance in Corpus Christi and other major cities of Texas.

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What is Product Liability Insurance?

Product liability insurance helps your business cover the cost of defending legal claims from injuries to customers or damage to property caused by your products. In other words, if a customer is injured while using one of your products and decides to sue you, your product liability insurance can help cover the lawsuit. 

However, in the absence of the same, you may have to shell out of your pocket all the legal fees and damages claimed by the customer.

Not a pleasant thought!

What Claims are Covered under Product Liability Insurance?

There are three main types of product liability claims under a general liability insurance policy that a dissatisfied customer can make against your business:

Manufacturing Flaws: When a manufacturing defect causes injury or harm to a customer, the company producing the product can be held liable.

Design Error: When a design is flawed at the initial stage and causes an entire batch of products to be unsafe, the company responsible for designing the product can be held liable.

Failure to Warn: If a company fails to provide sufficient warning or instructions about using its products safely, it may face legal consequences if the consumer is affected by its use.

Product liability insurance can offer coverage from the financial consequences of claims related to the above lawsuits. Moreover, if you belong to a service industry, such as installing or repairing products that take place off-site, product liability insurance also provides coverage.

What is Excluded in a Product Liability Policy?

Product liability insurance has many exclusions that give the carrier ground to reject the claim or reduce its liability. A few common exclusions are:

  • Material Kind Exclusion: If you sell or manufacture a product that has ingredients that are prohibited or restricted by law, your product liability insurance may not cover such claims.
  • Efficacy of Product Exclusion: If the customer claims that your product fails to perform its purpose, your policy may reject such claims.
  • Reporting Exclusion: If you fail to disclose the manufacturing facts, such as the process, ingredients, and function of the product, to your insurer, then they may reject your claim.
  • Product Recalls: Product recalls refers to the voluntary withdrawal of a product from the market due to some health hazard issue. Such claims are not covered by product liability insurance.
  • Quality Control Exclusion: Product liability insurance requires you to maintain a certain level of quality control. If the manufacturing process or quality fails to meet those criteria, your insurer may reject your claim.

Why is Product Liability Important?

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If you are in a business involved with designing, manufacturing, or distributing products to consumers without product liability coverage, you are exposed to an array of potential legal issues.

In most court cases, the financial burden of a product liability lawsuit rests solely on the shoulders of the product manufacturer, which will make you liable to bear the legal costs and damages awarded to the customer. 

Payouts in liabilities include:

  • Legal fees
  • Damages for pain and suffering
  • Medical bills
  • Lost wages due to time off work
  • Property damage.

If you are a small business, losing one liability lawsuit may be enough to put you out of the market. On the other hand, if your small business insurance in El Paso has adequate product liability coverage, it can help defend your business from such claims and offer financial protection.

Although the premiums for product liability insurance may seem high, the cost of having a policy is much less than the financial consequences you will face in case of an unexpected lawsuit. So make sure to get your business covered with adequate product liability insurance if you are involved in any manufacturing or distribution of products.


No business owners want to see a lawsuit and most certainly do not want to pay out a large sum of money from their own pockets. The best way to protect your business and its assets are to get product liability insurance. This coverage can save your business from the financial consequences of a lawsuit, which will help you keep your business running smoothly.

TX Insurance Quotes, the best insurance provider in Texas has always been committed to protecting small businesses from financial losses related to product liability claims. We provide our customers with the best products, services, and coverage from leading insurance carriers. 

Let us help you find an insurance policy that meets your needs and budget. Contact us today!