The short answer
Product liability for a hardware startup is the products-completed operations part of general liability: it responds to bodily injury or property damage caused by a product you sold or work you finished, after it leaves your hands. The typical enterprise ask is $1M per occurrence and $2M aggregate, with the products-completed operations aggregate stated separately on the certificate. The catch for an early company is that carriers price finished goods, and a policy written that way can exclude prototypes and pre-commercial units, so the wording has to be read against what you actually ship.
What product liability actually covers
General liability has two halves. Premises and operations responds to harm that happens while you are doing the work: a visitor tripping in your lab, a technician dropping a bracket onto a customer's rack during an install. Products-completed operations responds to harm that happens after the work is done and the product has left your hands: the unit you shipped in March that catches fire in a customer's warehouse in June, or the install you finished that fails a month later. Both halves sit on the same policy, each with its own aggregate limit.
The distinction matters because the two halves are underwritten differently. Premises and operations is priced on payroll and where your people work. Products-completed operations is priced on what you sell, how many units are in the field, and what they can do to a person or a building when they fail. For a hardware company the second half carries most of the exposure, and it is the half a generalist underwriter looks at hardest.
A robot arm that pinches a hand two years after delivery, a battery pack that ignites on a customer's bench, a lidar unit that a court decides was not eye-safe: these are products claims, and they arrive long after the sale. General liability is written on an occurrence basis, so the policy in force when the injury happens is the one that responds. Letting products coverage lapse between rounds leaves a gap that is hard to close later.
What buyers and contracts ask for
Before any contract asks, the wording asks. Policies written for finished goods can exclude pre-commercial products, prototypes and R&D units, and ITAR/EAR and government-use exclusions appear in hardware policies too (a specialty broker's deep tech insurance page, accessed 2026-09-12). A startup whose entire output is prototypes can hold a general liability policy whose products half excludes everything it makes. The certificate looks complete. The exclusion does its work at claim time.
A prototype running at a trade show is an operations exposure, and the venue will ask for a certificate before the booth opens, usually naming the organizer and the venue as additional insureds at $1M per occurrence. The unit has not been sold, so the products half is not in play, and a visitor who leans into a moving arm is a premises-and-operations claim on your policy. Tell the underwriter about the show schedule. A policy that was told you build in a lab may treat the demo as a surprise.
A contract manufacturer's policy covers its manufacturing errors. Your policy covers your design, your specification and your decision to ship. The insurance exhibit in the manufacturing agreement usually asks each side to carry products coverage and name the other as additional insured, and the indemnity clause decides who pays first when a defect could be either a build error or a design error. Enterprise buyers ask for the same shape at higher limits: $1M per occurrence and $2M aggregate is the floor, $5M through an umbrella when your unit sits inside their facility, and a products-completed operations aggregate stated on the certificate.
Who asks for products coverage
| Trade show or demo venue | $1M per occurrence general liability, with the venue and organizer named as additional insureds | An operations exposure; the unit is not sold |
|---|---|---|
| Contract manufacturer | Products coverage each way, mutual additional insured status, and an indemnity that splits design from build | Their policy answers build errors; yours answers design |
| Enterprise buyer | $1M per occurrence and $2M aggregate, often $5M through an umbrella | Products-completed operations aggregate shown on the certificate |
| Distributor or reseller | A vendors endorsement naming them for claims arising from your product | Arrives once you sell through a channel |
What it costs and what moves it
We do not publish a hardware-specific premium, because none of the sources we trust publishes one. The closest sourced figure is a floor: a venture-focused startup insurer's 2026 cost survey (2026-05-21) put the median general liability premium across its startup customers at $180, and those customers are mostly software companies with no products in the field. A hardware company with units at customer sites sits above that floor, and how far above depends on five things.
Units in the field is the first driver, because every shipped unit is a chance for a claim for as long as it runs. Product type is the second: a desktop sensor and a 400-kilogram mobile base are the same line at very different rates. Sales volume, lithium batteries and lasers each add to the rate, and moving parts around people add most of all. An underwriter who cannot see the guarding, the interlocks and the battery management system prices the worst version of your product.
The rate also depends on which carrier is pricing it. A generalist that writes finished consumer goods and a specialist that writes robotics both call the line products liability, and only one of them has a rate for a machine that walks. Recall is a separate purchase on top of either. Recall costs, the notices, the return shipping and the rework, are commonly excluded from general liability and sold as their own coverage, and we do not publish a number for it.
Exclusions that reach your product
The first is the products exclusion for a product still in development. Some forms remove coverage for any product not yet released for sale, and others define your products narrowly enough that a pilot unit on loan does not count as sold. If you loan, lease or pilot hardware before you sell it, the definition of your product in the policy decides whether the products half is in play at all.
The second is the professional services exclusion, which reaches you the moment you also install, integrate or advise. General liability excludes claims arising from professional services, and a carrier can argue that a unit misconfigured during your install was a professional error rather than a product failure. Tech E&O answers the professional side. The two policies need wording that meets in the middle so a claim about a bad install has a home.
The third is new. The standard-forms bureau filed generative AI exclusions for general liability effective January 2026, and one of them applies to the products-completed operations coverage part specifically (Independent Agent magazine, 2025-10-21). A hardware product with a model in the control loop, a robot that plans its own grasp or a camera that decides what it sees, can have its products coverage carved back by an endorsement that was written with chatbots in mind. We read for it on every hardware form.
How to buy it well
Describe the product the way a claim would. What it does, what it weighs, what it is near, how it fails safe, and how many are out there. Then describe the timeline: what is a prototype, what is on pilot, what is sold, and when the next tranche ships. An underwriter who can see the field count and the guarding prices the machine; one who cannot prices the category.
Ask for the products-completed operations aggregate stated on the quote and on the certificate, ask whether prototypes and pilot units fall inside the definition of your product, and ask for the exclusions page before you compare premiums. We place hardware with carriers whose appetite includes machines that leave the lab, read the products definition and the exclusions ourselves, and keep the certificate ready for the next venue, manufacturer or buyer who asks.
This page describes coverage in general terms. It is not an offer of insurance, and carrier appetite, policy wording, licensing, and availability govern every quote and every claim.
Common questions
Does general liability cover a prototype we demo at a trade show?
A running prototype at a show is an operations exposure, and the premises-and-operations half of general liability is the part that responds if a visitor is hurt, subject to the carrier's wording. The venue will ask for a certificate naming it as an additional insured before the booth opens. Tell the underwriter about the show, because a policy priced for lab work may not have contemplated a public demo.
What is the difference between product liability and general liability?
Product liability is one half of general liability. Premises and operations responds to harm while you are doing the work; products-completed operations responds to harm caused by a product you sold or work you finished, after it left your hands. Both sit on the same policy, and each carries its own aggregate limit.
Does our contract manufacturer's insurance cover our product?
Their policy covers their manufacturing errors. A defect that traces to your design, your specification or your decision to ship lands on your products coverage, and the indemnity clause in the manufacturing agreement decides who pays first when the cause is unclear. Both sides usually carry products coverage and name each other as additional insured.
Is a product recall covered by product liability insurance?
Usually not. Recall costs, the notices, the shipping and the rework, are commonly excluded from general liability and sold as a separate recall coverage. We do not publish a number for recall coverage; the price follows the units in the field and what a recall of your product would physically involve.
Do we need product liability before we sell anything?
You need general liability before your first lease, demo or site visit, and the products half of it matters the moment a unit leaves your hands on loan, on pilot or for sale. The thing to check before you sell is whether prototypes and pilot units fall inside the policy's definition of your product, because some forms exclude products still in development.
Does the new generative AI exclusion affect a hardware product?
It can. The standard-forms bureau's generative AI exclusions for general liability took effect in January 2026, and one version applies to the products-completed operations coverage part. A hardware product with a model making decisions in the control loop can have its products coverage narrowed by that endorsement, which is why we read every hardware form for it.
Terms in this guide
Sources
- 01A specialty broker's deep tech insurance page, on pre-commercial product exclusions and ITAR, EAR and government-use exclusions, accessed 2026-09-12
- 02A venture-focused startup insurer's 2026 startup insurance cost survey, median general liability premium, 2026-05-21
- 03Independent Agent magazine, on the standard-forms bureau's generative AI exclusions for general liability and the products-completed operations coverage part, effective January 2026, 2025-10-21
Read next
- Insurance for robotics companiesThe lines a robotics startup needs before its first customer deployment, with typical contract limits, the segments underwriters treat differently, and where 2026 AI exclusions reach robots.
- Why robotics applications get declinedWhat a declination actually means for a robotics, drone, autonomous-vehicle or hardware company, where each segment trips the wire, and how the same company gets placed on the second try.