If a business manufactures, sells, or distributes products, it may want to purchase product liability insurance to protect against loss due to liability for personal injuries and property damage alleged to have been suffered by someone who used or was affected by a product.

Any business in the product supply chain—a manufacturer, distributor, or retailer—may be sued on one or more legal theories generally known as product liability—including the defective design of a product (design defect); the defective marketing of a product (marketing defect or failure to warn); or the defective manufacturing of a product (manufacturing defect).

Product liability insurance is also purchased by manufacturers, suppliers, and contractors in the construction industry to protect against claims that a product used in a construction project was defective.

In California, businesses involved in the manufacturing, selling, or distribution of products are exposed to potential lawsuits under product liability law. These lawsuits can be based on various legal theories, such as design defects, marketing defects (including failure to warn), or manufacturing defects. To mitigate the financial risks associated with such claims, businesses often purchase product liability insurance. This insurance provides coverage for legal fees, settlements, and court judgments related to claims that a product caused personal injury or property damage. It is important for businesses at any point in the product supply chain, including those in the construction industry, to consider such insurance to protect their financial interests in the event that a product they made, sold, or used is alleged to be defective and causes harm.