A Guide to Product Liability Insurance
Do you manufacture, commission or sell products? Our simple guide explains all you need to know about Product Liability insurance, and how it could well be a vital part of your business insurance.
Product liability
Product liability insurance mainly concerns businesses that produce products, although sellers and retailers also need to be aware of their legal responsibilities.
The production and subsequent sale of a product that is directly used by consumers or used as a part or tool in making other products is legally required to be safe and fit for purpose.
If someone were to be injured or hurt through using a faulty product, after all the care in the world the producer could still be held liable. This makes product liability insurance a vital aspect of business insurance for all manufacturers.
Am I a manufacturer or a retailer?
A business can be both or one or the other. This depends on the business model and who their customers are. We will talk more about the responsibilities of each in the next section but first let’s understand exactly which category or categories might apply to you.
The largest portion of responsibility towards product liability falls on the producer of the product. This can include:
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Manufacturers and retailers that supply own-brand products.
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Any business that repairers, alters or services an existing product.
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Someone who repurposes or rebrands an existing product.
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Importers of products from places where the safety requirements differ from the country it is sold in.
Retailers and distributers such and shops and sellers are not usually directly responsible in a product liability case but do still have a duty of care to their customers.
What does product liability insurance protect me against?
A compensation case brought against a producer is for loss, damage or injury and can be made anytime with 3 years of using the product. In some cases this can be longer. There is no upper limit to how much the claim can be and is calculated against the severity of the individual case and the scale of loss.
If a faulty product is widely distributed and has wide scale affects the compensation costs can easily be in millions. Even compensation to an individual customer who suffers loss of earning for 6 months can cost thousands of pounds. This makes product liability insurance a vital part of the protection for your business as well as part of the safety commitments you make to your customers.