Compare product liability insurance quotes in Canada
If you manufacture, distribute, or sell products, having the right coverage can save you from a hefty claim. Get a free product liability insurance quote with us today – no obligation required.
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What is product liability insurance in Canada?
Product liability insurance is a crucial type of commercial insurance designed to protect your business from financial losses arising from claims related to the products you manufacture, distribute, or sell. If a product you provide causes injury to a customer or damages their property, this can help manage the costs associated with such incidents – covering items like legal fees, settlement bills, and medical expenses.
What does product liability insurance cover?
What doesn't product liability insurance cover?
Other terms for product liability insurance
Product liability insurance may also be known as product risk insurance or product indemnity insurance. While these terms are often used interchangeably, be sure to double-check the exact coverages on your policy as each insurer may differ. Plus, some form of product liability coverage is typically included under a general liability insurance plan.
Who needs product liability insurance coverage?
If your business is involved in manufacturing, distributing, or selling products, you should strongly consider having product liability insurance. This coverage is crucial for protecting your business from claims related to product defects that cause harm or damage. Here are a few examples of professions and industries that can significantly benefit from a product liability insurance policy:
Manufacturers
Businesses that produce goods can face significant liability if their products are defective or unsafe. Product liability insurance covers these risks, ensuring manufacturers are protected from costly claims.
Wholesalers & distributors
As a middleman between manufacturers and retailers, you can be liable for defects found in the products you handle. Product liability insurance helps protect you from these potential claims.
Importers
Importing products from abroad can expose you to risks, especially if the products don’t meet local safety standards. Product liability insurance covers claims arising from any defects in the imported goods.
Selling products online means you could be held responsible for defects, even if you didn't make the products yourself. Product liability insurance is essential to shield your business from these risks.
In-store retailers
Physical retailers are accountable for the products they sell, such as appliances, clothing, and more. Product liability insurance is crucial for covering potential claims and providing peace of mind in your day-to-day operations.
Restaurants & food services
Whether you run a restaurant or handle food distribution, there's a risk of facing claims due to food contamination or labelling issues. Product liability insurance helps protect your business from potential legal and financial consequences.
Examples of product liability insurance claims
To understand the value of product liability insurance, it's helpful to look at a few specific examples of claims you could potentially face. Here, we outline three different liability incidents, along with how having the right coverage in place can protect your small business financially.
Kitchen appliance fire
A kitchen appliance sold by a retailer has a wiring defect that causes it to overheat and start a fire in a customer’s home. Product liability insurance can cover the costs of repairing the damage to the home and any claims for compensation due to property loss or injury.
Contaminated food
A food processing company unintentionally contaminates a batch of its products, resulting in several customers becoming ill after consumption. Product liability insurance can help cover the medical bills for those affected and any legal claims brought against the company for the contamination.
Cosmetic skin reaction
A cosmetic product manufacturer sells a new skincare cream that causes severe allergic reactions in some users. Product liability insurance can cover the cost of customer medical treatments and the legal defense costs if users sue the manufacturer for damages.
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Looking for product liability coverage? We can help – get a free, customized quote with us today (no obligation required).
How much is product liability insurance?
The cost of product liability insurance can vary based on the unique risks associated with your business and the products you handle. Typically, small to medium-sized businesses can expect to pay annual premiums ranging from $300 to $3,000 – or about $0.25 per $100 of retail sales (e.g. $1,250 for $500,000 in products). Keep in mind that these are general estimates, and the exact cost for your business may differ. Higher-risk industries with larger operations usually incur higher premiums due to their increased exposure to potential claims. To find the exact price you'll be paying, be sure to shop the market with us today.
If you have commercial general liability insurance, you may also already have some form of product liability coverage under it, so be sure to ask your insurer if it is included in your quote. Plus, you can also bundle product coverage with other types of business insurance – such as professional liability insurance, business interruption insurance, director's and officer's insurance, and cyber liability insurance – under one single policy. Consulting a licensed commercial insurance broker can help ensure your insurance package is customized to the unique needs of your business.
Factors that impact your general liability insurance quote
To better understand the quoting process, here are six different factors that impact the cost of your product liability insurance. Generally speaking, the more risk your business brings, the more you'll need to pay for its insurance.
- Industry & product type
Certain industries are seen as higher risk for product liability claims. For example, manufacturers of consumer electronics, pharmaceuticals, or children's toys typically face higher premiums due to the potential for significant harm or extensive recalls.
- Business size & revenue
Larger businesses with higher revenues and broader distribution networks often pay more for product liability insurance. This is because they typically have greater exposure to claims, both in volume and in potential financial impact. A larger scale of operations increases the likelihood of product-related incidents and claims.
- Claims history
Your past claims history plays a crucial role in determining your premiums. If your business has previously faced product liability claims, insurers may consider you a higher risk and charge higher premiums. Conversely, a clean claims history can help reduce your insurance costs.
- Coverage limits
The level of coverage you select will directly influence your premium. Higher coverage limits offer more extensive protection but come at a higher cost. Your deductible choices also impact the premium, with lower deductibles leading to higher premiums.
- Safety measures
Businesses with robust safety protocols and quality control processes in place may qualify for lower premiums. Insurers favor companies that demonstrate a commitment to reducing risk through comprehensive product testing, stringent safety standards, and regular compliance audits.
Frequently asked questions on product liability insurance
Is product liability covered under general liability?
Most business insurance companies will include product liability under their general liability insurance, but some may offer it as a stand-alone policy. Be sure to speak with your insurance broker to clarify what’s included in your package to ensure you have all the coverage you need.
How do I get product liability insurance in Canada?
If you’re looking to protect your business with product liability insurance, take a few minutes to compare business insurance quotes with us. We’ll provide a quote and connect you with a licensed insurance broker in Canada who will help you finalize the coverage for your business as seamlessly as possible.
Does product liability insurance cover you internationally?
If your business sells, manufactures, or distributes products on an international level, be sure to inform your insurance broker as you may need more coverage. Also, be sure to verify the industry standards (e.g. label requirements) for your product in other countries to prevent liability claims as best as possible.
Is product liability insurance required by law?
No, product liability insurance is not mandatory in most businesses industries. However, if your business offers any sort of product, you should consider it as one claim could cause immense financial trouble.
If you work with other businesses to sell, manufacture, or distribute your product, you could be required by another party to purchase products liability insurance. Also, ensure that the other parties (eg. supplier, manufacturer) have enough coverage and speak to your insurance brokers about listing each other on your policies – you wouldn’t want someone else’s mistake to become your financial responsibility.
Does product liability insurance cover services?
No, if your business offers services instead of a physical product, product liability insurance will not cover you if a third party holds you liable for the service. Instead, purchasing professional liability insurance will protect you against claims of property damage or bodily injury resulting from your advice.
For instance, if you operate a gym that also sells merchandise, you should opt for a fitness insurance policy that includes both products liability insurance and professional liability insurance. Products liability insurance will protect you if a customer injures themselves using the equipment you sold them, while professional liability insurance will compensate for damages if a customer injures themselves because of a workout you led.
On the other hand, you may only need either one of product liability insurance or professional liability insurance. If you’re shopping for contractors insurance, and you build chairs for sale, product liability insurance would be the right coverage for your case. If you offer a service, such as construction management, you should opt for professional liability insurance instead.
Do builders need product liability insurance?
In general a builder or contractor would not need product liability insurance. They would most like have builder's risk insurance or contractors insurance.
Product liability insurance is recommended for anyone who sells, manufactures, or distributes a product. Since a builder doesn't generally manufacture, sell, or distribute a product, this form of insurance is not necessary for them.