Product Liability Insurance provides manufacturers, distributors and retailers of various products (tangible property) with coverage in case of a liability suit.

Under the law, a claimant may bring legal action against a manufacturer, supplier or retailer, in theory for negligence, for breach of warranty, for misrepresentation or for strict tort.

Negligence refers to failure to supply a safe product, or supply a defective product or supply a product which was manufactured from defective/inferior materials.

The duty owed the consumers is that the product be designed that it is safe for its intended use; it is properly tested at various stages of use; it is made of defect free materials and it is properly assembled.

Defects are critical in all liability issues and vary in definition. Defects may result from a design issue, which renders the entire product unsafe or not worthy for its intended use.

The manner in which the product is handled, packaged or shipped may render the product ‘defective’.

Inappropriate labeling is also part of a negligence suit, as the manufacturer is responsible for appropriate instructions for use and appropriate measures to be taken in an emergency involving the product.


Breach of Warranty is the failure to comply with the warranties issued to the consumer at the time of purchase.

Warranties may be verbal or written and they are either ‘express warranties’ or ‘intended warranties’.

An express warranty focuses on statements made by the seller/retailer to the consumer, expressly describing the product.

Whether verbal or written, such statements usually guarantee the product to be free of defects for a certain period of time, such as a one year warranty.

The implied warranties are imposed by law and generally accompany products stating the purpose of use and common expectations of the product.


Strict Liability places the burden of product liability on the vendor of the product rather than the manufacturer of the product.

A classic and well known example of a product liability case was adjudicated in 1916 by the New York State Court of Appeals (appealed from prior judgment).


The plaintiff Donald MacPherson was injured when one of his wooden wheels on his 1910 Buick collapsed.


The defendant: Buick argued that they only manufactured the vehicle but not the tire – they only installed it. They further denied liability as the plaintiff purchased the automobile from a retailer, rather than directly from Buick.


The court issued judgment in favor of the plaintiff:

Defendant was negligent in the fact that it did not inspect the wheels prior to selling the vehicle for resale to the public.

Defendant owed a duty of care to plaintiff.