What is product liability insurance?

Product liability insurance is a type of business insurance that can cover the cost of compensation claims if someone is injured or their property is damaged by a product that you’ve sold. In certain situations you may be liable even if you haven’t actually manufactured the product.

What does product liability insurance cover?

Product liability insurance can pay the legal fees and compensation costs if someone sues you for injury or damage.

You’re likely to be liable to pay these compensation costs if you manufacture the products you sell, but you could also be liable if the products bear the name of your business or if you’ve repaired or refurbished them. You may also be liable if the manufacturer can’t be traced, has gone out of business, or is outside the EU.

For example, you run an online cake business and someone blames you for food poisoning, or you run a toy shop and a faulty toy hurts a child. In each case, you may be asked to pay compensation.

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How much product liability insurance do I need?

It’s up to you to decide how much product liability insurance you need. Simply Business offers product liability insurance as part of public liability cover - which protects you from compensation claims for injury or damage caused by your business - and our insurers offer cover limits of up to £5 million or £10 million.

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Is product liability insurance required by law?

Product liability insurance isn’t a legal requirement, but you may find that manufacturers, suppliers, distributors or retailers you work with will require you to have it. On top of that, if you are found liable for injury, damage or death caused by one of your products, you can be sued.

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Who is liable for damage caused by a defective product?

Under the Consumer Protection Act, manufacturers, distributors, suppliers and retailers could be held responsible for damage, injury or death caused by their product or any of that product’s component parts. However, the party held liable will depend on the specifics of each individual case.

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Ready to set up your product liability cover?

With Simply Business you can compare multiple quotes and build a tailored policy in just a few minutes. Why not take a look now?

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