What is Product Liability insurance?

Blogs 18 Jun 2021

FSB Insurance Service explains what you need to know about Product Liability insurance, including what it covers and why your business might need it.

Product Liability is an essential type of business cover to protect many companies operating in the UK. But what exactly is this form of insurance, does your business need it, and what does it, and does it not, cover?

Our insurance experts from FSB Insurance Service answer your frequently asked questions.

What is Product Liability cover?

This type of insurance is concerned with the products your business sells. If one of your products causes a customer to become ill or injured, or causes damage to their property, this cover protects you and your company. It covers you for any claims that customers might make against you, like compensation costs or legal fees, regarding the product you’ve sold to them.

This could include different types of products, like some food you’ve sold in your cafe that leads to a bout of food poisoning, or a toy you’ve manufactured that injures a child. It could also be a washing machine you’ve supplied that floods a customer’s kitchen.   

Do you need this insurance?

Product Liability cover is recommended if your business designs, manufactures, or distributes products for sale or free of charge. You can be held liable for a faulty product that you supply, even if you don’t manufacture it.

You can also be held responsible if:

  • Your business’s name is on a product
  • Your company repairs, refurbishes or changes a product
  • The product you sell is imported 
  • You’re unable to identify the manufacturer of the product you sell, or they have gone out of business

It’s also worth noting that things can go wrong, even with the safest of products. Personal injury claims can be very expensive, so it’s better to be safe, and make sure you’re covered, than be sorry, and worry about having the finances to pay out for compensation or legal fees. If something does go wrong with one of your products, with this insurance you can feel confident knowing that you’re protected.  

What does this insurance cover?

The main areas that Product Liability insurance covers are protection against compensation for:

  • Personal injury, caused by your product
  • Loss of or damage to a property, caused by your product  
  • Unforeseeable circumstances, like product faults that weren’t identified by your company’s quality control system

What if you distribute, but don’t manufacture, your products?

If you have sold a faulty product that you didn’t manufacture, you should be covered if you can show:

  • The product was faulty when it was supplied to you
  • You gave your customers adequate safety instructions about the misuse of the product
  • You included terms with the product about returning faulty goods to the manufacturer
  • The supply contract you have with the manufacturer covers product safety, quality control and returns
  • Your business has good quality control and systems for record-keeping 

What might this insurance not cover?

Depending on the level you choose, there are different things that your product liability insurance might not cover. This includes:

  • Faulty products that are the result of bad workmanship
  • When your faulty product has caused financial losses to a person or business

Is your business protected?

Public Liability cover is just one of many key types of business insurance, which should be considered for your company if you design, make or supply products for your clients or customers. With every type of insurance, there’s a lot to consider, including what level of cover will be the most effective and what fits your business. 

Business insurance that makes sense

FSB Insurance Service is designed by small businesses for small businesses. An award-winning full general insurance broking service with exclusive discounts, tailored support and a dedicated insurance advice line.

Find out more

FSB Insurance Service Limited is authorised and regulated by the Financial Conduct Authority (FCA Registration No: 788654 ) Registered Office: 20 Fenchurch Street, London, United Kingdom, EC3M 3AZ. Company Number: 10831430