Insurance · product safety · SBA · CPSC

Product liability insurance and safety basics

Once a product leaves your workshop and sits on a national retailer’s shelf, the number of people who could be hurt by a defect — and the number who could sue — goes up sharply. Two questions follow: how you are insured, and how you show the product meets federal safety rules.

The insurance types the SBA describes

The U.S. Small Business Administration lists six common kinds of business insurance. For makers, the second one is the headline:

Note the gap a lot of makers fall into: a home-based business rider covers a small amount of equipment and injury to visitors, but the SBA describes product liability as a separate coverage aimed specifically at defective products. If you are moving from craft fairs to wholesale, that is the moment to revisit what you hold.

How the SBA suggests buying coverage

1. Assess your risks. Think through accidents, natural disasters, lawsuits and seasonal risks that could hit the business.
2. Find a reputable licensed agent. The SBA points out that agents earn commission on what they sell, so look for one focused on your needs.
3. Shop around. Compare rates, terms and benefits from several agents.

Practical prep for that conversation: have your product list, materials, sales channels, expected annual sales and any retailer vendor packet in hand. Supplier expectations are set by each retailer (Lowe’s, for example, points suppliers to its Vendor Code of Conduct), so ask the buyer whether the vendor agreement sets insurance or indemnity requirements before you buy a policy.

Safety certification: the children’s-product case

Insurance pays after something goes wrong; safety compliance is about preventing it. Many of the products that show up in maker pitch competitions — blankets, toys, learning aids — are aimed at children, which brings in specific federal rules from the U.S. Consumer Product Safety Commission (CPSC).

The CPSC defines a children’s product as a consumer product designed or intended primarily for children 12 or younger. If such a product is subject to a children’s product safety rule, the domestic manufacturer or importer must issue a Children’s Product Certificate (CPC), based on testing by a CPSC-accepted third-party laboratory. The certificate must be in English and contain seven elements:

1. Identification of the product
2. Citation of each applicable safety rule
3. Name, address and phone number of the certifying manufacturer or importer
4. Contact for the person keeping the test records
5. Date and place of manufacture
6. Date and place of testing
7. The third-party lab’s details — or a small-batch registration number where that applies

General-use (non-children’s) products follow separate testing and certification guidance under what CPSC calls a General Certificate of Conformity. The CPSC also notes that from July 8, 2026, importers of most regulated consumer products must file certificates electronically with U.S. Customs and Border Protection.

Small-batch manufacturer relief

Third-party lab testing can be expensive for a tiny producer, so the CPSC offers limited relief to registered small-batch manufacturers. To qualify, a firm’s total gross revenue from all consumer products in the prior calendar year must be $1,436,864 or less, and it must have made no more than 7,500 units of the covered product in that year.

Before you pitch: a risk checklist

• Does your current policy explicitly include product liability, or only general liability or a home rider?
• Do you know the retailer’s insurance and indemnity requirements from its vendor agreement?
• Is your product “primarily intended for children 12 or younger”? If so, which CPSC rules apply, and do you have a CPC?
• If you are small, are you registered as a small-batch manufacturer for this calendar year?
• Are test reports and certificates filed where you can produce them quickly when a buyer asks?