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If you’re a manufacturer, a retailer or you sell physical goods, then there’s always a risk that your products can cause personal injury or property damage. This is where product liability insurance comes in.
Product liability insurance provides cover for people who manufacture, distribute or sell products and protects you against any resulting financial damages. It’s often bundled with public liability cover.
Product liability insurance protects businesses that sell products from lawsuits that claim a product has caused injury or damage.
This type of insurance helps you pay for your defence and for any money you may end up owing as a result of damages (if any).
Product liability insurance is a close cousin of public liability insurance, which covers damages not caused by products. In fact, many policies combine the two into one, simply called “liability” insurance.
While it’s not mandatory, product liability is strongly encouraged for businesses involved in the life cycle of a product. This can include parties that are directly or indirectly responsible for the damage. Here’s who it could include:
As you can see, many people could be liable for a faulty product. That’s because lawyers will try to determine who’s responsible for the product failure and that blame does not always lie with the same party. For example, an electrician installing a power point in a home may not have created or imported the products used but they could still be liable for claims if they didn’t install them properly.
The cost of your product liability cover depends on your unique circumstances. The insurer will work out a quote based on how likely they think they’ll be on the hook for a claim related to the products you sell.
Your cost could be anywhere from a few hundred to tens of thousands of pounds per year, based on the following factors:
While you could receive a benefit in a claim, it’s often better to avoid the hassle of making a claim in the first place.
As we’ve seen, the blame for a faulty product can lie anywhere along the chain of businesses that ultimately get that product to the customer. Here are some tips that will help you avoid a claim, wherever you are in that chain:
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