This research discusses and analyzes consumer protection in Indonesia through product liability insurance mechanism. Insurance institution becomes important to transfer producer's liability risk for the products he produced for consumer's consumption or use, if consumers suffer accident and or loss because of consuming or using such product. In Indonesia, the intention to materialize legal effort of Consumer Protection has existed since 1998 with enactment of Law Number 8 of 1999 on Consumer Protection. To face business law development especially in insurance area which its impact on legal protection for consumers of product in general, at present it is necessary to have a reform and or regulation which certainly will be able to anticipate the development of business, in creating and implementing contracts in insurance business practices. As for the problem in this paper is the importance of product liability insurance and product liability insurance mechanism. The research method used in this dissertation is normative-qualitative with comparative approach. The outcome of the research shows that product liability insurance has an important role in protecting consumers' interest in the current Indonesian society. This product liability insurance provides guarantee for consumers to receive compensation if the products being used cause injuries/loss, even such compensation is not only for the consumer who uses the product but also for bystanders when the product is being used. In mechanism of product liability insurance, producers have to premium for products insured which its value shall depend on quantity and type of product, risk level for products insured.Keywords: Consumer Protection Law, Product Liability Insurance.