Posted on: October 20, 2026 by Huntersure
A product failure doesn’t tell the whole story about liability. The problem may stem from a manufacturing defect, an error in the design process, or a combination of factors. For agents evaluating professional liability insurance for product design firms, understanding the firm’s role in developing the product is essential.
Product liability and errors and omissions (E&O) address different exposures, but the same incident can raise allegations involving both. Agents need to examine the firm’s professional responsibilities and the applicable policy terms rather than assume one type of insurance will address every aspect of a claim.
Product liability involves claims that a defective product caused injury or damage. Allegations may concern defects in design, manufacturing, or product warnings. Depending on the circumstances, a manufacturer’s general liability insurance may address resulting bodily injury or property damage through its products-completed operations coverage.
E&O insurance addresses allegations that a professional made an error, failed to perform an agreed service, or acted negligently while carrying out professional responsibilities. For product designers, those responsibilities may include developing mechanical specifications, evaluating component performance, or recommending equipment for a particular application.
A design defect can create exposure under both theories of liability. The finished product may be defective, while the outside firm responsible for its design may face allegations that its professional work contributed to the failure. Coverage depends on the allegations, the insured’s involvement, and the language of the relevant policies.
An E&O claim against a product designer must be evaluated in light of the firm’s professional duties and alleged errors. A product failure alone does not establish professional negligence or determine whether an E&O policy will respond.
Consider a product design firm hired to develop a component for industrial machinery. The firm specifies a load capacity that proves inadequate for the equipment’s intended operation. After manufacturing and installation, the component fails, damaging other machinery.
The equipment manufacturer could face a product liability allegation concerning the defective component, while the design firm could face a professional negligence allegation involving its calculations and specifications. However, if the manufacturer substituted materials or changed specifications without the designer’s approval, the failure could stem from the manufacturer’s decisions rather than the design firm’s work.
Product design firms can perform substantially different work, even when they describe their operations using the same industry terms. A firm may create technical drawings for a manufacturer without controlling production. Another may select components, design automated systems, oversee testing, or advise clients on equipment use. Each service carries different professional responsibilities.
Agents should establish exactly what the firm does and who makes decisions throughout product development. Important considerations include:
Design records and project documentation can also help clarify responsibilities. Risk management for product design professionals should include maintaining design records, revisions, and testing results to help resolve disputes.
A product-related claim may involve several parties and different types of damages. Agents should review the firm’s professional liability coverage alongside its general liability and product liability protections, focusing on three areas:
Huntersure offers specialized E&O insurance for product design professionals, including tailored descriptions of services and contingent bodily injury and property damage coverage. Agents can contact Huntersure to discuss their clients’ operations and explore appropriate coverage options.
Huntersure LLC is a full-service Managing General Agency that has provided insurance program administration for professional liability products to our partners across the United States since 2007. We specialize in providing insurance solutions for businesses of all sizes. Our program features can cover small firms (grossing $2.5 million annually) to large corporations (grossing $25 million annually or more). We make doing business with us easy with our breadth and depth of knowledge of E&O insurance, our proprietary underwriting system that allows for responsive quoting, binding, and policy issuance and tailored products to meet the needs of your insureds. Give us a call at (855) 585-6255 to learn more.
Posted in: Product Design Liability
