Product liability insurance is an essential form of coverage for businesses that manufacture, distribute or sell products. Jewellery businesses in India are no exception. In fact, given the high value and emotional significance of jewellery, these businesses need to have adequate product liability insurance coverage in place. Product liability insurance provides protection against claims of injury or damage caused by a product.

In the case of jewellery businesses, this could include claims of injury caused by a defective clasp or stone, or damage caused by a piece of jewellery that breaks or falls apart. Without adequate insurance coverage, a jewellery business could face significant financial losses if a claim is made against them. This could include the cost of legal fees, compensation payouts, and damage to the business's reputation. In this blog, we will discuss what product liability insurance is, what it covers and why it is an essential component of risk management for jewellery businesses in India. 

Product Liability Insurance

Product Liability Insurance provides coverage for businesses that manufacture, distribute, or sell products. If a product causes harm or injury to a customer, the policy provides financial protection to the business. The insurance policy typically covers legal fees, medical expenses, and compensation awarded to the injured party. This can help protect the business from financial ruin in the event of a lawsuit. It is important to note that Product Liability Insurance is not a substitute for quality control measures. Businesses should take all necessary precautions to ensure that their products are safe for customers.

However, accidents can still happen, and having Product Liability Insurance can provide peace of mind and financial protection. When selecting a Product Liability Insurance policy, businesses should carefully review the coverage limits, exclusions, and deductibles. It is also important to work with a reputable insurance provider who has experience with jewellery businesses and understands the unique risks associated with the industry.

For jewellery businesses in India, Product Liability Insurance is an essential coverage to have. This is because jewellery products can cause harm or injury to customers in various ways such as allergic reactions, choking hazards, or even physical injuries caused by faulty products.

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Coverages Provided by Product Liability Insurance Policies 

Product liability insurance policies in India typically provide coverage for various aspects related to liability arising from the manufacturing, distribution, and sale of products. The coverages provided may include:

  • Third-Party Liability: This coverage protects against claims for bodily injury, property damage, or financial loss caused by a defective product. It includes compensation for medical expenses, legal costs, and damages awarded to third parties.
  • Manufacturing Defects: Insurance covers liabilities arising from defects in the manufacturing process that lead to injury, damage, or loss.
  • Design Defects: Coverage extends to liabilities resulting from flaws or inadequacies in the design of a product, which make it unsafe for its intended use.
  • Labelling or Packaging Issues: Insurance covers liabilities related to improper labelling, inadequate instructions, or faulty packaging that results in harm to consumers.
  • Failure to Warn: Protection is provided for liabilities arising from the failure to warn consumers about potential risks associated with the proper use of a product.
  • Legal Expenses: Coverage includes legal defence costs, settlements, or judgments resulting from product liability lawsuits.
  • Product Recall Expenses: Insurance may cover the costs associated with recalling a defective product from the market, including transportation, communication, and disposal expenses.
  • Personal Injury Claims: Coverage extends to claims for emotional distress, mental anguish, or other non-physical injuries caused by a defective product.

It's essential to review the specific terms, conditions, and exclusions of each policy to understand the exact coverage provided by a Product liability insurance policy in India, as it may vary depending on the insurer and the policy chosen. Additionally, businesses should ensure that their coverage adequately addresses their unique risks and exposures in the product manufacturing and distribution process. Consulting with an insurance professional or legal advisor can also help in determining the appropriate coverage for your business needs.

Factors to Consider While Choosing the Right Insurance Coverage for Your Jewellery Business

When it comes to determining the right coverage for your jewellery business, there are several factors to consider. Here are some key points to keep in mind:

1. Type of Coverage

There are different types of product liability insurance policies available for jewellery businesses, such as product liability, public liability, and professional indemnity insurance. It is important to choose the right type of coverage that suits your business needs.

2. Coverage Limits

The coverage limit is the maximum amount that the insurance company will pay out for a claim. It is important to choose a coverage limit that is appropriate for your business. If your coverage limit is too low, you may not have enough protection in case of a claim. On the other hand, if your coverage limit is too high, you may end up paying higher premiums than necessary.

3. Business Size

The size of your business can also determine the type and amount of coverage you need. A small jewellery business may not require the same level of coverage as a larger, more established business.

4. Types of Products

The types of products you sell can also affect the type and amount of coverage you need. If you sell high-value items, you may need higher coverage limits than if you sell lower-value items.

5. Risk Assessment

Before choosing a product liability insurance policy, it is important to conduct a risk assessment of your business. This will help you identify potential risks and determine the appropriate level of coverage.

By considering these factors, you can determine the right coverage for your jewellery business and protect it from potential liabilities.

Why is Product Liability Insurance Important for Jewellery Businesses in India?

Product liability insurance is important for jewellery businesses in India for several reasons:

  • Protection Against Lawsuits: Jewellery businesses can face lawsuits if their products cause harm or injury to consumers. Product liability insurance provides coverage for legal expenses, settlements, or judgments resulting from such lawsuits, protecting the business from financial losses.
  • Consumer Safety Concerns: Jewellery products, especially those containing precious metals and gemstones, can pose safety risks if they are defective or contain harmful materials. Product liability insurance helps ensure that businesses can compensate consumers for any damages or injuries caused by their products, thereby maintaining consumer trust and safety standards.
  • Risk of Contamination or Defects: Jewellery items may contain components that could be contaminated or defective, posing health risks to consumers. Product liability insurance can cover expenses related to product recalls, testing, and replacements, helping businesses manage the financial impact of such incidents.
  • Brand Reputation: Product defects or safety issues can damage a jewellery business's reputation and credibility in the market. By having product liability insurance in place, businesses demonstrate their commitment to consumer safety and satisfaction, which can help preserve their brand reputation and integrity.
  • Peace of Mind: Running a jewellery business involves inherent risks, including the potential for product-related accidents or injuries. Product liability insurance provides peace of mind to business owners, knowing that they are financially protected against unforeseen circumstances that could jeopardize their operations or assets.


From the discussion above, we can have a clear idea of why product liability insurance is crucial for jewellery businesses in India. By obtaining this type of insurance, businesses can ensure that they are covered in the event of any legal action taken against them due to product defects. It is important for businesses to carefully consider their insurance needs and select a policy that provides adequate coverage for their specific operations. This may include coverage for product recalls, legal fees, and damages awarded in court. Jewellery businesses should also take steps to minimise the risk of product defects by implementing quality control measures and regular product testing. By doing so, they can reduce the likelihood of facing legal action and protect their reputation in the industry.

Frequently Asked Questions

  1. What are the steps involved in a typical Claims Process in Product Liability Insurance for Jewellery Businesses?

When a jewellery business faces a claim for product liability, it is important to understand the claims process in product liability insurance. The following steps are typically involved in the claims process:

  1. Notification: The first step is to notify the insurance company as soon as possible after the incident occurs. The policyholder should provide the insurer with all the necessary information, including the date and time of the incident, the nature of the claim, and the contact details of any witnesses or injured parties.
  2. Investigation: Once the insurance company receives the claim, it will initiate an investigation to determine the validity of the claim. The insurer will gather all the relevant information, including any documentation, photographs, and witness statements.
  3. Evaluation: After the investigation is complete, the insurer will evaluate the claim and determine whether it is covered under the policy. If the claim is covered, the insurer will determine the amount of compensation that the policyholder is entitled to receive.
  4. Settlement: If the insurer determines that the claim is covered under the policy, it will offer a settlement to the claimant. The settlement may include compensation for medical expenses, lost wages, and other damages.

Jewellery businesses need to have a clear understanding of the claims process in product liability insurance. By following these steps, businesses can ensure that they are adequately protected and prepared to handle any claims that may arise.

2. What are the factors to consider for Jewellery Businesses while Comparing Product Liability Insurance Providers?

When looking for product liability insurance providers, jewellery businesses in India should consider several factors before making a decision. Here are some key factors to compare:

  • Coverage

It is essential to ensure that the insurance policy covers all potential risks associated with the jewellery business. This includes coverage for product defects, manufacturing errors, and other liabilities that may arise from the use of the product.

  • Premiums

The cost of insurance premiums is a significant factor to consider when comparing product liability insurance providers. Jewellery businesses should compare the premiums offered by different providers and choose one that offers the best value for money.

  • Deductibles

Deductibles are the amount that the insured must pay before the insurance coverage kicks in. It is essential to compare the deductibles offered by different providers and choose one that suits the business's needs.

  • Reputation

The reputation of the insurance provider is also an important factor to consider. Jewellery businesses should research the provider's track record and customer reviews to ensure they have a good reputation for handling claims promptly and fairly.

  • Customer Support

Excellent customer support is crucial when dealing with insurance providers. Jewellery businesses should choose a provider that offers excellent customer support and is readily available to answer any questions or concerns they may have.

By comparing these key factors, jewellery businesses in India can choose the right product liability insurance provider that meets their needs and offers them the best value for money.

3. Please give 2 examples of product liability claims faced by Jewellery Businesses

Here are 2 examples of product liability claims that may be faced by a jewellery business-

Example 1:  Customer Injury

A customer purchased a necklace from a jewellery store, and while wearing it, the clasp failed, causing the necklace to fall and injure the customer. The customer filed a lawsuit against the jewellery store, claiming that the store was responsible for her injuries. The jewellery store had to pay a large settlement to the customer, which could have been avoided if they had product liability insurance.

Example 2: Allergic Reaction to Metal

A customer purchased a pair of earrings from a jewellery store, and after wearing them, developed an allergic reaction to the metal. The customer filed a lawsuit against the jewellery store, claiming that the store was responsible for her medical expenses. The jewellery store had to pay a settlement to the customer, which could have been avoided if they had product liability insurance.