Product liability insurance

What is product liability insurance?

Product liability insurance is part of your public liability policy. It covers the cost of legal fees and compensation if one of your customers makes a claim against you because of a faulty product you have supplied or sold them. 

Product liability covers the legal fees, damages and/or compensation resulting from legal action taken against your business. The amount you can claim back through a product liability policy will depend on your coverage level. You can get coverage up to £1 million. 

This claim may come from an injury or damage to a customer's property caused by the product.

You may be held liable for damage or injury resulting from any product you have manufactured, repaired, or refurbished.

Do I need product liability insurance

Yes – if you make, sell, or supply products or goods then you should consider public liability insurance, which will include product liability as standard. This applies whether you’re the seller of the goods, the manufacturer, or both.

It’s not a legal requirement for your business to have this insurance in place, but you could be held liable for a legal bill without proper cover.  

Your business is held legally responsible if your products cause any injuries or damage even if you didn’t manufacture them yourself, so it’s best to have product liability insurance if:

  • Your business’ name is on the product
  • Your business repairs, refurbishes or changes a product
  • You imported the product from outside the European Union (EU)
  • You cannot identify the product’s manufacturer
  • The manufacturer has gone out of business

What's covered by product liability insurance?

Product liability insurance policies covers claims between up the level of cover you’ve chosen for public liability, as it is a part of this cover.

You are covered for:

  • Property damage compensation because of your faulty product

  • Personal injury compensation caused by your faulty product

You won't be covered for:

  • Customer dissatisfaction with a product

  • Product recall

For a full list of exclusions make sure to check your policy documents.

Product liability insurance examples

Product liability insurance will cover physical, actual products that you sell, manufacture or supply – in case of a claim from a customer due to injury or damage.

For example:

  • You’re a furniture manufacturer, and the treated upholstery you’ve added to your pieces causes an allergic reaction in a customer

  • You’re a deli owner and have decided to try your hand at making your own mayonnaise and sauces in store which has resulted in several customers getting sick

If any of these types of situations resulted in a claim, would you be able to cover the legal and compensation fees which would be involved?

If the answer is no, then you need product liability insurance.

    How much does product liability cost?

    Realistically, it’s impossible to put a one-size-fits-all price on insurance. This is especially true for covers such as product liability, which aren’t available as a standalone cover, but is included in the cost of your public liability insurance.

    If you’d like to find out exactly how much you’ll pay for business insurance with us, you can click the button below to get a quote online today. Plus, you’ll get a 10%* discount when you buy your policy online.

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    What's the difference between product and public liability insurance?

    Product liability insurance is a part of public liability insurance, but there is an important distinction in the protection that they provide.

    Public liability insurance covers the work that you do or services that you provide– say, if someone is accidentally injured in your workplace, or their property is accidentally damaged because of work you carry out on their premises.

    Product liability covers physical products or parts that you sell or provide, offering protection against accidental damage to third-party property and any injury that is caused by them.

    One of the main differences between public and products liability is the type of claims each cover deals with. Public liability deals with single claims, while product liability claims are in aggregate.

    Is product liability insurance a legal requirement?

    No, there is currently no legal requirement to have product liability insurance. Your legal obligation is to sell products that comply with product safety regulations and to ensure that this compliance is appropriately demonstrated.

    You can find out more about your product safety obligations on the website.

    However, it is still highly recommended that you invest in public liability and product liability as there may be times during your business journey where it’s requested by a third party that you have cover, or you may want to mitigate the financial risk posed by legal bills.

    For example, if you sell your products at markets, craft fairs, public events, school fairs etc then the parties that are organising those events mat require all vendors to have business insurance.

    Or you may get taken to court over a personal injury claim. In this instance, you could be liable for court costs, legal aid, and compensation payments. You could also have to pay any private medical bills involved in the rehabilitation of your customer. Product liability makes sure if the worst happens, your business isn’t left out of pocket.

      I distribute the product, but I don’t manufacture it – am I still covered?

      Yes – you will also be covered for products you distribute as well as those you sell.

      However, you will need to ensure that: 

      • You’ve carried out the proper safety and quality tests

      • You can evidence that the products were faulty when you received them from the supplier

      • You gave customers the right safety instructions and warnings about misuse

      • You made it clear how the returns process worked for your customers

      • You have contractual agreements in place with the manufacturer around product safety, quality control, and returns

      Do tradespeople need product liability insurance?

      No, tradespeople do not need product liability insurance.

      While tradespeople need public liability insurance to cover them from claims of accidental injury or damage, you won’t need products liability as you’re providing a service, rather than selling a product.

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        **This discount is applied automatically and lasts for the lifetime of your policy.