Any product that your business manufactures, sells or repairs is your responsibility, if something goes wrong and they cause injury to your customers or damage to their property then a claim for compensation could be made against you.
It’s therefore important to ensure you are covered should your products cause injury or damage to a person or their property. Products liability insurance covers you in this instance (up to certain limits).
What is product liability insurance?
Products liability insurance is there to protect your business from claims for legal and compensation costs resulting from injury to people or damage to their property caused by products you manufacture, sell or repair.
Do I need product liability insurance?
A faulty product which causes injury or damage could open you up to massive claims, as a business owner it is always good practice to ensure you are protected should you be liable to pay any claims for compensation.
If you are planning on working with other companies they may request that you have the right products liability cover in place before they do business with you. However, product liability insurance is not compulsory.
What does it cover?
Product liability insurance covers you for personal injuries and damage to property caused by your products. It also covers you if the products you have sold were sourced from outside the EU or if their manufacturer has gone out of business.
Product liability insurance shouldn’t be confused with product warranties or guarantees, which cover faults of the products themselves. Products liability insurance covers the damage resulting from that fault.
What are my responsibilities to ensure I’m covered?
Before paying out on any claim, your insurer will check whether you have complied with relevant quality control procedures, labelling requirements and other responsibilities set out by Trading Standards and gov.uk. So it is worth reading up on these on a regular basis.
The cost of products liability insurance is based on the products themselves and the business’s turnover. If you win new contracts or start supplying different products, you should inform your insurer to make sure you have the appropriate cover.