Products Liability Insurance

What is Products Liability Insurance?

Product liability insurance covers the cost of compensating anyone who is injured or sustains property damage caused by a faulty product that your business manufactures, distributes, supplies or retails. This includes goods that are given away for free.

Does my business need Products Liability insurance?

Products liability insurance is not usually mandatory (unless you sell food or drink or in certain industries) but a products liability claim can financially ruin a company therefore it is highly recommended for all businesses that are involved in supplying and/or manufacturing goods.

There are a variety of pieces of UK legislation that apply to products liability. One of those is the Consumer Protection Act 1986. It’s important that business owners understand that this Act applies strict liability to products liability claims meaning that there is no need for a claimant to prove negligence in order to make a successful claim. Furthermore it covers business to business sales of products as long as those products are used in the workplace.

Your business may be held legally responsible for any injuries to people or damage to property caused by a faulty product. In the UK you can be held liable for faulty products even if you did not manufacture them. You may be liable for compensation if:

• your business manufactures the product

• your business’s name is on the product

• your business repairs, refurbishes or changes a product

• your business distributes, supplies or retails the product

• you imported the product from outside the European Union

• you cannot identify the product’s manufacturer, or the manufacturer has gone out of business

What does a Products Liability Insurance policy cover you for?

Product liability insurance protects you against the cost of compensation for:

• personal injuries caused by your faulty product

• loss of or damage to property caused by your faulty product

• unforeseeable circumstances such as product faults that your quality control system could not identify

Unless specifically agreed and stated in your policy Product liability insurance may not cover you for:

• efficacy

• faulty products resulting from bad workmanship

• financial losses to a business or person caused by your faulty product

• fines and penalties

• product recall expenses

Examples of Products Liability claims

• The dye in clothing sold causes irritation to the customers skin

• Faulty assembly and installation of equipment at a customers workplace causes injury and property damage

• Faulty electronics in a household appliance cause a fire and damage to the customers property

For assistance with products liability insurance contact us at www.fcinsurancebrokers.co.uk or call 0203 432 0270