Product liability insurance is a type of commercial insurance that can cover the cost of compensation claims if someone is injured or their property is damaged as a result of a product you sold. In some cases, you may be held accountable even if you did not create the product.
Do you need public liability insurance?
Product liability insurance may be an important consideration for any company that designs, manufactures, modifies, repairs, or sells products to customers. Product liability can help compensate for the risks your business faces if you sell, distribute, manufacture, construct, install, test, service, maintain, clean, or treat products as part of your work.
Even if you are only a part of a product’s supply chain, you could face a claim if a defect is discovered and causes injury or damage.
Product liability insurance is suitable for a wide range of businesses. An electrician may repair a toaster that later fails and causes serious injury.
Alternatively, a children’s toy store may sell a ride-on truck with an abrasive surface.
What does product liability insurance cover?
If someone claims you for damage or injury, product liability insurance can cover your legal fees and compensation. You are more likely to be held accountable if the products bear your company’s name or if you renovated or repaired them. If the manufacturer cannot be located, has gone out of business, or is not in the country, you may be held responsible.
Compare cheap insurance quotes
Whether you make handmade products at home, have your own factory or production facility in the UK to manufacture your own products, or import products from another country to resell here, it may be a great idea to invest in a product liability insurance policy to protect yourself against potentially costly liability claims.
This sort of insurance policy can help you in covering the costs if someone is injured by one of your products and claims you for compensation, as well as legal expenses and compensation pay-outs if a customer claims to have suffered financial loss as a result of one of your products.
What is the purpose of product liability insurance?
Product liability insurance protects businesses and traders from liability claims resulting from defective products.
Whether you sell manufactured goods, handcrafted goods, or food, the right product liability insurance could cover you and your company if one of your customers decides to make a claim against you.
Is it necessary to get product liability insurance by law?
No, product liability insurance is not required by law in our country.
However, if retailers sell your products in their stores, they may require you to have this type of insurance, and online sales marketplaces such as Not on the High Street and Etsy make this a requirement of their seller agreements.
Main difference between product liability and public liability insurance?
Product liability insurance is just a part of public liability insurance, but the coverage it provides varies significantly.
Public liability insurance covers the work you do or the services you provide—for example, if someone is accidentally injured in your workplace or their property is accidentally damaged as a result of the work you do on their property.
Product liability protects you against accidental damage to third-party property and injury caused by physical products or parts you sell or provide.
Cost of product liability insurance
Insurance is nearly impossible to price in a one-size-fits-all manner. It is determined by a variety of factors, including your industry, the type of products you make, where you sell, supply, and manufacture these products, and the price of the items you create.
However, there are a number of other factors that will decide the quote’s cost. One of the most significant is the number of employees
Other considerations include
- The age of your company
- Your profit and revenue figures (if applicable)
- The nature of the working environment
- Whether or not you have a secondary profession
- The amount of cover you need (the more coverage you want, the more expensive the policy will be).
Should you get public liability insurance?
Product liability insurance isn’t needed by law, but businesses in your supply chain may urge on it.
Food is an example of a product that must be safe for consumers to use under the law. It’s up to you to prove liability.
Suppose you own a restaurant; product liability insurance could cover you. If a customer gets food poisoning after eating your food. Food is your source of income; it is a product you sell. If you are claimed and do not have public and product liability insurance. The compensation, and legal costs could destroy you financially.
How does this insurance work?
Product liability insurance pays all of your legal fees. If a client claims you over a faulty or defective product you sold them. If you are ordered to pay the refund, your insurance will cover those expenses as well.
Before purchasing product liability insurance quotes, make sure that you need this type of coverage. Product insurance is necessary if you are legally responsible for the products you sell – but not all businesses are responsible. In most cases, you’re liable for making sure the safety of your products. If you made them yourself or if they carry your company’s name on them. You’re also responsible if your products were manufactured by another company but you repaired or renovated them. It’s up to you to prove liability.
Things you should remember while purchasing an insurance policy
Exclusions – Review your insurance policy to see what it does not cover or explicitly excludes to make sure you have got the right cover for your business.
Stipulations – The product liability policy may include quality control stipulations, which you must follow in order to be covered.
Product liability insurance is a more limited term by definition. You probably won’t require it unless you manufacture or supply a product. However, if you sell anything, from toys to chemicals, office supplies to sporting goods, you’ll be required to cover yourself.