Product Liability insurance covers the cost of defending claims and any compensation costs that your business might have to pay if products that you manufacture, supply, distribute or sell cause injury to someone or damage their property.
If you are a UK manufacturer, distributor, wholesaler or retailer of products, you have a legal responsibility towards your customers for any injuries or damage to property that your products cause.
Even if you are not the manufacturer, you could still be sued under product liability laws. It may be the case that you cannot identify the original producer, for example.
Product liability insurance typically provides between £1,000,000 and £5,000,000 cover. The limit of indemnity you need depends on the type of products supplied and the industries involved. A business insurance broker will help you decide what limit you need.
Product liability insurance is not a compulsory class of insurance. However, without this cover, one claim could put you out of business.
The cost of product liability insurance depends on your business, the types of products you supply and your turnover. Insurance for low-risk products will be cheaper than insurance for high-risk items. Any direct imports or exports may affect the premium, particularly if you import from outside the EU. If you are a manufacturer, the cost is likely to be more than if you are only involved in retail.
Product liability insurance is usually sold together with public liability insurance and is often included as part of a commercial combined insurance policy or a small business package insurance policy. It’s best to discuss your requirements with a business insurance broker, who will be able to advise you on what insurance you need.
Here are a few examples of accidents that have led to products liability claims:
- Injuries caused by cups or bottles that break
- Fires caused by faulty electrical products
- Food items that have caused acute gastroenteritis