You set up a fresh milk distribution business. After many years of hard work and loads of money on branding, advertisement and promotion finally the product line began to show some profit. Then a lawsuit came from a family member of a person who died of food poisoning after consuming the milk from bottle that bears your brand.
This is one typical real life examples on how this happens. It could really be because of negligence of your employees, fresh milk suppliers, bottling guys, or could also be some jealous competitors or someone with a malicious intent. For all you know, it may not even be your fault to begin with.
Product liability insurance helps in covering legal defense costs as well as compensation of really found to be negligent on your part. On top of that, you will also have access to lawyers who are expert in this areas to defend you (the insurer is on your side). Here is an informative article on product liability insurance.