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 Michigan, businesses involved in the manufacturing, selling, or distribution of products should consider obtaining product liability insurance as a safeguard against potential lawsuits. These lawsuits can arise from claims of personal injury or property damage caused by products that are alleged to have defects. Michigan law, similar to other states, recognizes various legal theories under product liability, including design defects, marketing defects (failure to warn), and manufacturing defects. Any party in the product supply chain, from manufacturers to retailers, can be held liable if their product is found to be defective and causes harm. Product liability insurance can provide coverage for legal fees, settlements, and court-awarded damages. In the construction industry, this type of insurance is particularly important as it covers claims related to construction materials or equipment that are alleged to be defective. While not a legal requirement, carrying product liability insurance is a prudent practice to mitigate financial risks associated with potential product liability claims.