Most any product liability policy that appears to be cheap is going to be a claims made policy rather than an occurrence policy. The difference in price of the two types of policies is simply reflective of the huge difference in coverage between the two.
Say you're making and selling a product in 2012, and have product liability. By 2015 you're no longer manufacturing the product, and are either retired or strictly making parts to the designs of others, and believe you no longer need product liability coverage.
Someone sues you in 2015 for an injury your product supposedly caused in 2012. If your policy was the occurrence type, you're covered the same as if the suit was filed in 2012. If its the claims made type, then you're only covered if you're still carrying an active product liability policy with the same company you insured with in 2012.
The simplest way to put it is that the insurer's liability with a claims made policy is no longer in force the instant you no longer have an active policy in force with them. This is true regardless of whether you fail to renew the policy, or the company refuses to renew the policy. If you had a policy with ABC Co. in 2012, and switched to coverage by XYZ Co. in 2013, you'd still have no coverage for an incident that happened in 2012, even though you may still be insured by XYZ in 2015 when the action is filed.
When you look at the typical time lapse between an incident happening and the filing of a lawsuit, and the ability of an insurer to shut the door on liability the day active coverage ends, its not surprising that a claims made policy is a lot cheaper than an occurrence policy.
Machining in general is not a high risk business, so a person wouldn't want to assume that they could maintain the cheaper claims made coverage with one company over the long terms based on their experience with maintaining general liability with one company over several years. Product liability is considered high risk, so its a different game.
Insurers move into and out of high risk coverage with every change in the wind. During the last 15 or so years (1990 to 2005) we were in the crane business (definitely high risk), we seldom had insurance with the same company 2 years in a row even though we'd never had an injury claim, and had not had any property damage claims other than one for about $15K back in the mid-70's. Always had the same agent, but the actual insurers were continuously moving in and out of the business. It wasn't a big deal for us since we always had occurrence coverage, but the same situation with claims made coverage would've left us continuously exposed to anything anyone claimed to have happened previous to the effective date of the current year's policy. As Mud said, you can end up broke from defending against such a claim even if you win in court.
Unlike things like workman's comp and other such coverages where the premium goes down over time if you have a good safety record, the premiums for any sort of high risk coverage vary with the losses of the insured pool. When the moron in Milwaukee used Big Blue to lift a 180,000# truss in a 40mph wind, and did about $150 million damage for his efforts, our crane coverage went up almost 20% the following year.