What is Products Liability and why may I need it?

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 or supplied. 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 sell a faulty toy that hurts a child. In each case, you may be asked to pay compensation.

Do I need products liability insurance?

Product liability insurance isn’t a legal requirement, but you may find that manufacturers, suppliers, distributors or retailers you work with or markets & events you trade at may 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.

Even if you haven’t manufactured the product yourself, you may still be liable in the event of a claim i.e. you failed to store a product in line with the manufacturers guidelines which caused the defect to occur.

Who is liable for damage caused by a defective product?

The 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.