Product Liability Insurance protects businesses against claims that a product they have supplied has caused injury or damage. With the Consumer Protection Act 1987, businesses can be held liable for faulty products across the entire product lifecycle - whether they manufactured, sold, or repaired an item.
What Does Product Liability Insurance Cover?
Product Liability Insurance covers compensation and legal fees that arise from injury or property damage claims caused by a defective product. This includes unforeseeable issues that may have slipped through even rigorous quality control systems.
However, Product Liability policies usually won't cover damages from poor workmanship, financial losses to other businesses, or losses caused by product recalls. It's typically packaged together with Public Liability Insurance.
Is Product Liability Insurance Necessary?
While not legally required, Product Liability Insurance is highly recommended for any business that handles products. You may also need cover to work with distributors, manufacturers, or retailers in your industry.
You can face substantial liability risks even for products you didn't manufacture yourself:
If your branding is on a product
If you import products from overseas
If you are unable to identify or locate a product's manufacturer
If you repair, refurbish, repackage, or modify a product
Distribution and retail companies can minimise risks by showing due diligence - having terms for returns, strong record-keeping and quality control, safety labeling on hazardous materials, etc. But insurance is still crucial protection.
What Does Product Liability Insurance Cost?
Policies usually range from £1 million to £10 million in coverage. Premium costs vary widely based on:
Your specific products and industry
Potential injury/damage risks
Manufacturing, repair, and sales volumes
Company financials e.g. estimated turnover by territory
With so many variables, it's critical to work with an experienced broker to ensure you get adequate and affordable cover.