Understand how to secure for product liability insurance to protect against liable claims from injury or property damage from a product fault
Businesses dependent upon the circumstances can be held wholly responsible from injury or property damage as a result of a fault. Designers, manufacturers and distributors should all consider product liability insurance to protect your business from liable claims arising from bodily injury and property damage. Product liability cover is never offered in isolation and will typically be combined with public liability insurance.
Anyone who supplies products are responsible for their safety. The level of responsibility will depend on whether you are involved in the manufacture of the products, or whether you are involved with the distribution.
Product liability insurance provides financial protection for businesses against liable claims arising from injury or property damage as a result of a fault with a good you have provided. The business insurance will protect against legal costs and damages.
Products sold to consumers and commercial customers under must be safe and failing to meet your responsibilities can have serious consequences. With potential product liability claims arising from anyone injured or has suffered damage to personal property.
Although not a legal requirement in the UK, product liability insurance should be considered by every business that manufactures, designs, distributes or supplies goods to customers. The cover is typically offered under a commercial combined policy and packaged with a number of other insurance covers.
Understand the types of liability and property insurance covers typically bought by manufacturing business to protect their interests.
Understand what policy covers are available to protect against damage or loss of stock, buildings, and equipment, in addition to covering liabilities.
Different product will carry a greater degree of risk. For example, goods designed for children are challenging because of the high awards of damages.
The company's turnover will be indicative of the insurer's exposure, a greater volume of goods increases the potential incidence of bodily injury.
Goods sent to the USA or Canada can increase your liability cost due to the size of the compensation awarded provided by the courts.
Materials or goods produced in Asia and other countries can restrict your ability to hold the supplier to account and increase your insurance cost.
Safety critical goods such as toys, electrical goods, machinery, fireworks, food, and medicines carry an increased risk should they fail when being used.
Perishable goods such as food or medication can easily be destroyed in transit or be ineffective once sold if not stored correctly.
Liabilities for products is governed by legislation and regulation. Goods sold to consumers and commercial customers under The General Product Safety Regulations 2005 are required to be 'safe'. Potential liable claims can arise from anyone injured or who has suffered damage to property.
Many consumer protection laws rely on 'strict liability', where it does not matter if the person accused did not intend to break the law. To use this defence, they must satisfactorily prove all reasonable precautions were taken to avoid an offence being committed. Failing to meet your responsibilities can have serious consequences.
Under the Consumer Protection Act 1987, manufacturers, distributors, suppliers, and retailers can all be held liable for damage, personal injury or death for providing defective goods to consumers.
Claims under the Act are generally brought against the product ‘producer’, which is generally regarded as the company that has their name on the product, however there can be a number of exceptions.
The most common exception is if the product has been imported to the UK from outside of the EU, the importer is then regarded as the producer. However, there are other circumstances we discuss below.
Public liability and product liability insurance is always purchased together for commercial activities, insurers will not offer cover for injury or property damage from a product fault in isolation. However there maybe additional policy covers, such as cargo insurance that your business should also consider.
Will protect against injury or property damage of persons in the course of your business activities (i.e., slips, trips and falls).
Is a legal requirement for companies with employees and offers protection from injury or illness compensation claims.