Product Liability Insurance

Find a Insurance Broker dealing with Product Liability Insurance »

What is Product Liability Insurance?

Product Liability Insurance (PLI) covers you against a claim made for damage to property or personal injury caused by your product. A product is usually defined as any physical item that is sold or given away.

Do I need Product Liability Insurance?

If you manufacture or supply goods and there is a risk that your product may cause damage to a third party then this cover could be extremely important. Under the Consumer Protection Act 1987, products must be “fit for purpose” and you will be held legally responsible for any damage or injury caused by your product.

In some cases suppliers of faulty products may be liable for compensation claims even if they did not manufacture it. If you are a supplier you will be liable if you can’t clearly identify the manufacturer; the manufacturer has ceased trading; your business name is on the product because it was manufactured for your brand; you imported it from outside the EU or your business repairs/changes the product.

If (as a supplier) you don’t want to be held liable for any claims you must show that the products were faulty when they were supplied to you and you must have a supply contract with the manufacturer that covers product safety, product returns and quality control. You must also show that you gave customers sufficient safety instructions and warnings about misuse, that terms for return of faulty goods to the manufacturer in any sales contract to the customer were included and that you have good quality control and record keeping.

How much cover do I need?

The average policy will provide cover of £2,000,000. However the amount can vary between £1,000,000 and £5,000,000 depending on the degree of risk associated with the business.

--
All content displayed on Insurance 4 Business is provided for general information only, and should not be treated as a substitute for the advice given by any professional.