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Product liability cover is essential if you manufacture and/or sell goods. If a product you sell injures someone, or damages their property, you could be liable, even if you didn’t make the product yourself.
Someone could make a claim against you if:
In these cases, product liability insurance would cover your legal fees as well as any compensation you are required to pay. Most small businesses can’t afford to take on the cost of unexpected fees, so holding product liability insurance is a really important aspect of protecting the company you have built.
You’re not legally required to hold product liability insurance, but as a seller, supplier or manufacturer, you do have a duty of care towards your customers. The Consumer Protection Act requires you to make sure that the goods you supply are safe. If your product causes injury or damage to a customer or their property, you could end up facing legal action.
The burden of responsibility to make sure that a product is safe usually falls on the manufacturer; but each case is different and would be assessed individually. If you do face legal action, you may have to make a product liability claim to provide assistance and help cover your costs and pay compensation.
If you want to get a product liability insurance quote with us, just use our online quote finder and answer a few questions about the kind of work you do.
Manufacturers, distributors, suppliers and retailers could all be liable if a product or a component part causes injury or damage. That’s why it’s important to have product liability cover in place even if you view your business as a side project or hobby – for example, if you make and sell your own jewellery on Etsy. Although your business may not provide your main source of income, you will still have many of the same responsibilities as a larger company.
Here are some instances in which you could be liable:
This applies to branded goods that you give away for promotional purposes, like pens and stickers, as well as goods for purchase.
If you restore a customer’s product - like a bike or watch, for example - and end up causing further damage to that product.
Companies from outside the EU may not fall under consumer legislation. The liability for any injury or damage caused by the product would then fall on you, the retailer.
This could apply to you if you buy your products from third party suppliers or you sell second-hand products. If the manufacturer cannot be identified, the burden of liability is yours.
If the company that made your product is no longer trading, compensation will be sought from you, the seller, for any damage or injury the product causes. This is because it is unlikely you will be able to recover the costs from the original manufacturer.
At Direct Line for Business, we don't offer one day or short term product liability cover. Product liability covers you for claims occurring within the specific period of insurance. Arranging a one day policy would only cover you for the day that you sell the product. So if a customer injured themselves, or their property was damaged, on any day after the date specified on the policy, you would not be covered.
For example, if you held one day cover and a customer bought a handmade dress from you, they might wear the dress for the first time two weeks after purchase. If they were then injured by a pin left in the dress, you would not be covered for any resulting legal action.
We offer annual product liability cover. So, if someone makes a claim against you because of any products or goods you have sold them in the days, weeks, or months after you take out your policy, you're covered providing your policy is still in force with us.
You can add public and product liability to your insurance policy along with any other cover that’s appropriate for your business.
We offer public and product liability together, so you’re also covered if a member of the public is injured or becomes ill because of your business activities. For example, if someone trips on your clothes rail as you set up for a craft fair, or if an employee spills scalding coffee on someone’s lap.
Here are some of the key features of our product liability cover: