Product Liability Insurance Basics
Product liability insurance is a must have for specialty food and beverage businesses. A popular question we get is, what is the difference between product liability and general liability? Unfortunately an adequate answer means learning some insurance terminology.
Liability policies breakdown in to these categories:
- General Liability
- General Liability policy that includes an endorsement for designated products
- Products Liability only
General Liability Breakdown
Two exposures determine coverage and premium:
- Premise and Operations
- Products and Completed Operations
Bodily injury or property damage coverage are the key elements of any liability policy. A slip and fall is a premise exposure. Injury from a product falls into the second exposure. This is an important point because insurance often starts with a product. However it can evolve into a premise/operations exposure. An example would be renting space or setting up a booth at a trade show.
General Liability policies provide coverage for both categories and is capable of handling changes to your operation. General Liability, with a designated premise endorsement, covers both exposures as well but only #2 for listed products. Product Liability is even more limited by only offering products coverage and no premise/operations coverage at all.
Most insurance companies will use either General Liability or General Liability with a designated products endorsement. Again either can be used for trade shows, demonstrations, office space, incubator kitchens and farmers markets.
Products Liability on its own may require another policy to provide coverage for Premise and Operations exposures. Products Liability policies can be useful for high risk products because the premium can be lower. For most food and beverage businesses these policies do not offer many advantages beyond premium.
Product liability is a general insurance term. Keep in mind there are differences in policy types and terminology when reviewing and shopping for insurance.
Thanks for reading,