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.
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.
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.
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.