What is product liability insurance?

What is Product Liability Insurance?

Product liability insurance is a business insurance product that is designed to help protect you if someone alleges they have been injured, or their property damaged, by a product sold by your business.

For instance, you could be held liable if food products you sell make someone ill, or a faulty electrical product causes a fire. 

This insurance can also cover situations where you are held liable for injury or property damage but didn’t actually make the product – for instance, you could be liable if you sold, repaired, or modified a product too.

What does Product Liability Insurance Cover?

Product liability insurance can pay legal fees and compensation awarded against you if someone takes legal action alleging a product you made, sold, repaired or modified caused them injury or damaged their property.

Do I Need Product Liability Insurance?

There is no legal requirement to take out product liability insurance, so whether you choose to take out this cover depends on your circumstances.

However, remember that no matter how careful you are when it comes to product design and manufacture, production mistakes can happen – and the result can be one or more faulty products entering the supply chain. In turn, if the worst should happen and those products cause injury or property damage, you could find yourself faced with expensive and potentially ruinous liability claims.

Product liability insurance could play an important role in protecting your business and your finances in these kinds of scenarios, so this cover is worth serious consideration.

How Much Does Product Liability Insurance Cost?

The cost of product liability insurance depends on the amount of cover you take out and the level of risk involved in the products you make, sell, repair, or modify. The level of risk could be determined by a wide range of factors including, but not limited to, the types of product you make, how you maintain quality control, how many products you sell, and where you sell them. 

It is always worth speaking to an expert for help in working out how much cover you need – though most businesses buying product liability insurance take out enough to cover them for compensation claims of between £1 million and £5 million.

If you’d like more information, help working out how much product liability cover you need, or a quote, get in touch.

[1] https://www.abi.org.uk/products-and-issues/choosing-the-right-insurance/business-insurance/liability-insurance/product-liability-insurance/

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