Certified Meeting Professional (CMP) Practice Exam

Product liability insurance is designed to provide protection against claims that arise from injuries or damages caused by defective products. This type of insurance specifically addresses the liability of manufacturers, distributors, suppliers, and retailers for any harm their products may cause to consumers. When a product is deemed defective—whether due to design flaws, manufacturing errors, or inadequate instructions—it can lead to significant legal claims from individuals affected by the product.

Product liability insurance covers legal fees and settlements associated with these claims, therefore allowing companies to manage the financial risks linked with product defects. This focus on defects or damages directly associated with products distinguishes product liability insurance from the concerns covered by other types of liability insurance, such as those related to property damage, employee actions, or unauthorized use of property.