How much does product liability insurance cost?

If you want to buy product liability insurance, the easiest way is to buy a general liability insurance policy, which usually includes this coverage. Together, the policies cover legal costs from bodily injuries, property damage, and wrongful death caused by your business—or its products.

The average cost of general liability insurance is $45 per month, or $538 annually. Most small businesses (63%) pay $60 per month or less for their policies.

Depending on your industry, you may see it referred to as:

• Product liability insurance for businesses such as retailers, manufacturers, and wholesalers
• Products-completed operations coverage for construction and installation businesses

Our figures are sourced from the average cost of business insurance policies purchased by TechInsurance customers from leading insurance providers. The median better reflects what you're likely to pay because it excludes outlier high and low premiums.

The amount of coverage you buy, which is reflected in your policy limits, is the most important factor when determining your premium. Product liability insurance has two limits:

• The per-occurrence limit is the maximum amount your insurance company will pay for claims from a single incident.
• The aggregate limit is the most the insurer will pay for claims during the policy period, which is typically one year.

Most small business owners (85%) choose a general liability policy with a $1 million per-occurrence limit and a $2 million aggregate limit.

Businesses that could face expensive product liability lawsuits should opt for higher limits to avoid paying costly legal fees out of pocket. Higher-limit policies cost more, but they cover more expensive claims.

When buying a policy, make sure the deductible is an amount you can easily afford, since your insurance won’t cover your liability claim if you can't pay your deductible. On average, TechInsurance customers choose a general liability insurance deductible between $500 and $1,000.

Insurance companies will also consider the following factors when determining your premium:

• Business revenue: Generally, higher-revenue businesses have more serious accident and claims rates, making them more expensive to insure.
• Types of products: Businesses that handle higher-risk products, such as those associated with frequent product recalls or high medical or legal defense costs, are more expensive to insure.
• Business size: Larger businesses are often considered higher risk and may pay more because they tend to sell more products, have higher sales volume, and face greater potential claim exposure.
• Value of your business property: The higher your business property value, the more you'll likely pay for insurance because there is more property to protect and replace.

General liability insurance is already one of the most affordable policies, but you can still lower your premium.

First, shop around. Insurance companies sell the same types of coverage at different rates. With TechInsurance, you can fill out an online application to easily compare product liability insurance quotes from the nation's leading carriers.

Here are a few other ways to save money on product liability insurance:

• Buy a business owner’s policy (BOP). Small, low-risk businesses may be eligible for a business owner’s policy. A BOP bundles general liability coverage with commercial property insurance at a discount, and typically includes product liability insurance.
• Pay the annual premium. Insurance companies let you pay your premium in monthly or annual installments. Paying the full annual amount will cost less in the long run.
• Reduce your risks. Avoiding product liability claims helps keep your premium low.

You can reduce your risk of claims to prevent financial losses and higher premiums.

Because product liability insurance covers potential incidents related to your products and completed services, you might consider:

• Holding employee training on the installation and maintenance of appliances or other items
• Working with trusted partners in your product supply chain
• Testing any products sold at your shop to detect product defects
• Enacting strict quality control to avoid manufacturing defects
• Avoiding products that could cause customer and employee injuries, which could result in high medical costs
• Implementing product labeling to prevent personal injury (such as allergic reactions) and wrongful deaths