Product Liability insurance covers a manufacturer or seller or any other party that makes the products available to the consumers against a defective product which is sold and it causes any injury to the latter. Such an insurance protects them against lawsuit arising from injury or death caused by their products.
A manufacturer would always want to meet the basic quality standards and not sell a defective product that may cause an injury to its customer.
However, there may be such cases whereby a defective product went unnoticed, got packed and a customer purchased it, which later lead to an injury upon using the same.
Having such insurance can protect a manufacturer from a legal lawsuit since there is always a possibility of a manufacturing defect in a product and a consumer getting injured.
A typical insurance includes the manufacturer of components, wholesaler, retailer, distributor, and other middlemen.