What does product liability coverage protect against?

Product liability coverage is a specialized form of insurance designed to protect businesses from financial losses that may arise due to injuries or damages caused by products they manufacture, distribute, or sell. This coverage is crucial because if a product is found to be defective or fails to meet safety standards, the business can be held legally responsible for any resulting harm to consumers.

In the context of this coverage, several key factors are addressed. First, it encompasses claims related to manufacturing defects, design defects, and insufficient warnings or instructions regarding the product's use. This means that if a customer is injured by a product or experiences property damage due to a product malfunction, product liability insurance helps cover the costs associated with legal defenses and potential settlements or judgments.

The other options pertain to different types of liabilities. For example, losses from employee misconduct relate to issues of fidelity and employee behavior rather than product performance. Liabilities from business property typically involve real estate and physical assets, which are not covered under product liability. Injuries sustained in the workplace fall under workers' compensation insurance and not product liability. This clear distinction emphasizes the unique protective role that product liability insurance plays, making it essential for businesses involved in product sales.