Products Liability
CGL coverage for bodily injury or property damage caused by the insured's product after it leaves the insured's possession.
What It Is
Products Liability coverage under a CGL policy responds to claims of bodily injury or property damage caused by the insured's product after it has left the insured's premises and is in the possession of others. It is part of Coverage A and shares the Products-Completed Operations Aggregate limit with completed operations coverage.
A "product" under the CGL policy includes goods or products manufactured, sold, handled, distributed, or disposed of by the named insured, as well as containers, materials, parts, or equipment furnished in connection with those goods. The coverage does not apply to the product itself — only to the resulting bodily injury or property damage caused by the product.
Products liability claims often involve manufacturing defects, design defects, or failure-to-warn allegations. The CGL policy covers defense costs and indemnity payments up to the applicable limits.
Why It Matters for Brokers
Brokers placing coverage for manufacturers, distributors, and wholesalers must ensure adequate products-completed operations aggregate limits. A single product recall or mass tort can exhaust the aggregate quickly. Brokers should also be aware of products liability exclusions that carriers may attach, such as exclusions for specific product types or ingredients. Understanding the interplay between the per-occurrence limit and the products-completed operations aggregate is critical for proper limit adequacy analysis.
Real-World Example
A commercial food manufacturer produces 50,000 units of a seasoning blend that is distributed to restaurants across three states. A contamination issue causes 23 people to become ill, generating $1.2M in bodily injury claims. The manufacturer's CGL policy with a $1M per occurrence and $2M products-completed operations aggregate responds. Because the contamination is treated as a single occurrence, the $1M per occurrence limit applies, and the manufacturer's umbrella policy picks up the remaining $200,000.
Common Mistakes
- 1Confusing products liability with product recall coverage — the CGL policy does not cover the cost of recalling defective products, only the resulting bodily injury or property damage.
- 2Failing to recommend a sufficient products-completed operations aggregate for manufacturers with high distribution volumes where a single defect can generate hundreds of claims.
- 3Not reviewing carrier-specific product exclusion endorsements that may bar coverage for the insured's primary product line.
How brokerageaudit.com Handles This
Policy Checker extracts the products-completed operations aggregate limit, identifies any product-specific exclusions, and compares these against the client's industry classification and revenue to flag potential adequacy concerns. Submission Intake captures product type and distribution volume during the quoting process to ensure carriers receive accurate information for underwriting.