What is product liability insurance?
If you supply products to the public, you are liable to make sure those products are safe. No matter what strict safety process controls you have in place, unexpected events can happen and mistakes can be made-mistakes that you need to be insured against.
Product liability insurance protects your business against claims for personal injury or damage to property caused by a product your business supplied, sold or designed. A policy will cover the cost of compensating anyone who makes a claim, plus the associated legal fees.
If the worst happens, people can sue for compensation for death or injury. They can also sue for damage or loss of private property. The amount they can claim will depend on the harm they have suffered. Here’s the thing – there is no fixed upper limit, so this could mean the end for your business.
Do I need product liability insurance?
While product liability insurance is not a legal requirement, if your business designs, makes or supplies a product – even if it is something you give away for free – then you should make sure you have this type of insurance in place to protect your business.
You can be held liable for faulty products even if you did not make them if:
- Your branding is on the product
- You imported the product from outside the EU
- You make changes to a product before supplying it to the public
- You supplied a product but you can’t identify the manufacturer
- The manufacturer has ceased trading
Do I need product liability insurance and public liability insurance?
While both types of insurance cover your business against claims for injury or damage made against you, the two types of cover differ in what they provide cover for.
Product liability insurance covers your business against injury or damage caused by a product you have sold, supplied, designed or repaired, whilst public liability insurance covers you against claims for injury or damage caused as a result of your business activity, or within your business premises.
For total peace of mind, it’s worth taking out both product liability insurance and public liability insurance.