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Do NY Dispensaries Need Product Liability Insurance?
Do NY dispensaries need product liability insurance? Learn when it’s required, what it covers, and how lawsuits can name retailers even if they didn’t manufacture the product.
What this page explains
- What product liability insurance covers
- Why retailers are still exposed
- When coverage is contractually required
- What happens if you don’t carry it
Why Retailers Can Be Sued
Under general product liability law, anyone in the distribution chain may be named in a lawsuit, including:
- Manufacturer
- Processor
- Distributor
- Retail dispensary
If a customer alleges:
- Contamination
- Mislabeling
- Adverse reaction
- Failure to warn
The dispensary may be included in the claim—even if you did not create the product.
What Product Liability Insurance Covers
Product liability policies generally cover:
- Legal defense costs
- Settlements
- Judgments
- Claims alleging bodily injury or property damage from products sold
Defense costs alone can be substantial.
Is It Required in New York?
OCM regulations and many commercial leases require dispensaries to carry liability coverage. Product liability is often embedded within commercial general liability policies or required separately depending on how the policy is structured.
Landlords, lenders, and investors frequently require proof of product liability coverage in lease or financing agreements.
If your lease requires it and you do not carry it, you may be in breach of contract.
What Happens If You Don’t Carry It?
Without product liability insurance:
- You pay defense costs out of pocket
- You pay settlements out of pocket
- Your general liability policy may exclude product-related claims
- A single lawsuit could materially damage the business
Insurance is not about assuming you are at fault. It is about paying to defend yourself.
What to Check in Your Policy
Before assuming you are covered:
- Confirm product liability is included
- Confirm limits are sufficient
- Review exclusions
- Confirm coverage extends to cannabis products specifically
Do not rely only on the certificate of insurance.
Bottom Line
Even if not explicitly mandated in every context, product liability insurance is a core risk-management tool for NY dispensaries because retailers can be named in lawsuits involving products they sell.
Related Pages
- Why Is Cannabis Insurance So Expensive in NY?
- Why Cannabis Insurance Claims Get Denied
- What Is a Certificate of Insurance (COI)?
- What Is a Vendor Indemnification Clause?
