What is the Difference Between Product and Public Liability Insurance?

Product liability and public liability insurance are two different types of insurance policies that someone in the business of selling goods may hold. The two types of insurance offer very different protections, however. Product liability insurance protects the policy holder from harm caused by a product because of an inherent quality of the product or defect in the product. Public liability insurance protects the policy holder from injuries that take place on his or her property due to negligence in its maintenance.

Where product and public liability insurance differ is in the injuries they cover. Products liability lawsuits typically arise when there is a dangerous quality or defect in a product that results in an injury to the user. The plaintiff in a products liability suit simply has to show that he or she used the product in a manner that similar products are typically used. For example, if someone purchases a dirt bike with faulty brakes and suffers an injury riding a trail as a result of the defect, then a products liability action would likely be sought and the product liability insurance would cover all damages.

Negligence lawsuits against someone who runs a business where people are free to come and go while shopping are applicable to public liability insurance. For instance, if the sidewalk outside a shop is dangerously icy, it is typically the responsibility of the shop owner to make the area safe. In the event he or she neglects to do so and someone gets hurt, the injured person may bring a lawsuit for negligence against the shop owner. Product and public liability insurance will likely not cover the damages for this lawsuit, even if the owner may hold both types of policies. An injury of this type is limited to public liability insurance.

Product and public liability insurance policies further differ in the actions by the policy holder that may lead to invoking their coverage. Products liability cases can arise through no real fault of the holder since he or she will be held to strict liability. In other words, the seller or manufacturer of the item can be liable for the harm to the plaintiff just due to the fact that the product was defective and the plaintiff got hurt, even if the seller’s or manufacturer’s actions were not the direct cause of the defect.

Where product and public liability insurance coverages are similar is in the scope of damages they cover. Each policy typically covers all damages awarded to the plaintiff in a products liability or negligence action as well as the policy holder’s attorney’s fees. For this reason, it is advised that anyone in the business of selling products hold both product and public liability insurance policies.