You did not make it. You can still be the one who gets sued for it.
A distributor sits in the chain between a manufacturer and a customer, and that position carries liability of its own. When the maker is overseas, dissolved, or simply unreachable, the party the claimant can actually reach is you.
Start a quote file Read the short answer firstEveryone who sold it can be named.
Distance makes you the reachable party.
Withdrawing stock is its own cover.
Can a distributor be liable for a product it did not manufacture?
Yes. A claimant injured by a product can name any party in the chain that put it in front of them, which includes the importer, the distributor and the retailer as well as the maker. Products liability is the part of a general liability policy written to answer this, and it generally responds to your role in the chain rather than to whether you designed or built anything. Most wordings include it, but not every schedule shows it. Check that it is on yours, and that it has not been cut back for particular goods or for sales into the United States.
Where this bites hardest is on imported goods. If the manufacturer is on another continent, has no assets here, and cannot practically be pursued, the distributor is not one of several defendants. The distributor is the defendant. That is not a legal technicality, it is simply who is within reach.
First, what happens to the goods while you have them? If you only warehouse and ship sealed cases, your role is narrow. If you repack, relabel, assemble, kit, translate instructions or put your own brand on it, you have moved closer to being treated as the maker, and some wordings say so directly. Second, what does your supply agreement say? An indemnity from your supplier is worth exactly what the supplier is worth and how easily they can be pursued. Both questions are answerable in an hour and both change what your policy needs to do. The regulator takes the same view of who counts as a supplier. Health Canada says “The Canada Consumer Product Safety Act applies to suppliers of consumer products in Canada, including manufacturers, importers, distributors, advertisers and retailers.” That Act sets regulatory duties rather than deciding who a claimant can sue, and it does not reach every product. Food, drugs, cosmetics and medical devices are covered by other laws. Read Health Canada’s guide to the Act (opens in a new tab).
The first two are usually there. The last two usually are not.
Products and completed operations
The section that answers injury or damage caused by goods after they have left you. Check the limit and check that it is not being confused with your general liability limit for premises accidents, because they can be shown separately.
Vendors cover
A retailer may ask to be added as additional insured for products they bought from you. It is a routine request. Ask what it costs before you agree to it in a supply contract rather than afterwards.
Recall and withdrawal
Getting product back off shelves is a logistics and communications cost, not a damages cost, so liability cover generally does not answer it. Recall is separate and it has to be asked for. For anything consumed, worn or used by children, it is the item most worth pricing.
Goods in your care
Stock you hold that belongs to someone else, whether on consignment or under a third party logistics arrangement, is not your property. Care, custody and control exclusions commonly apply, and insuring your own stock does not insure theirs. There are two different answers here and they are not the same purchase. Warehouse or bailee legal liability answers what you are legally liable for, which can be a good deal less than the value of the goods once the terms of your storage contract are read. Property cover on goods of others insures the goods themselves whether or not the loss was your fault. Which you need depends on what you promised your clients.
Three that come down to position in the chain. All three are illustrations, not client files.
The supplier who could not be reached
An imported item fails and causes an injury. The supply agreement carries an indemnity from the manufacturer, and the manufacturer has no presence and no assets here. An indemnity nobody can enforce is worth very little, and the distributor’s own products cover is what has to answer.
The label that changed everything
A business buys generic product and applies its own brand before selling it on. To the buyer it is now the source. Own brand goods can move a distributor much closer to a manufacturer’s position, and it is worth telling your broker the moment you start doing it.
The consignment stock
A warehouse fire destroys inventory, and part of it belongs to clients rather than to the business. The property policy insures the business’s own stock. The clients’ goods need cover of their own, and that is the piece that gets missed when the arrangement grows gradually.
The ones that come up when a retailer sends their contract.
Our supplier indemnifies us. Is that enough?
It is worth having and it is not a substitute for your own cover. An indemnity is only as good as the indemnifier’s ability to pay and your ability to pursue them, which is precisely the thing that fails on imported goods. Hold both.
We only warehouse and ship. Are we really exposed?
Less than a business that repacks or rebrands, and more than nothing. You are still in the chain of supply. The narrower your role the easier that is to argue, which is a reason to document exactly what you do and do not do to the goods.
A customer wants us to add them as additional insured. Should we?
It is a common and generally reasonable request from a retailer. Read what it asks for, because some versions reach beyond products you supplied and into the retailer’s own conduct. Send us the clause and you will get a written answer on it.
Is recall cover expensive?
It depends heavily on what you distribute, and it is a separate conversation from liability. The useful first step is knowing whether you hold any of it at all, because products liability is not written to cover getting the product back.
We hold stock for other businesses now. Does that matter?
Yes, and it is the kind of change that happens without anyone updating the policy. Other people’s goods in your building are not covered by insuring your own. Tell your broker when that arrangement starts, not at renewal.
Two that follow the same stock: what general liability does not cover and what a carrier owes you for freight.
Not the question you had? Send your supply agreement and the question with it through the quote file and you will get a written answer.
Know where you sit in the chain before somebody else decides.
What you do to the goods, and what your supply agreement says. Two answers that set your whole exposure.