Product liability insurance covers claims that a product you supplied caused injury or damage because it was defective. It matters because the Consumer Protection Act 1987 imposes strict liability: an injured person does not have to prove you were negligent, only that the product was defective and caused the harm. The liability can fall on the manufacturer, on a business that puts its own brand on a product, and on whoever imported it, so retailers and wholesalers are exposed as well as makers.
Because liability is strict, a business can be liable for a defective product even if it took reasonable care. That is what makes product liability cover important for anyone who makes, brands, imports or sells physical goods.
What does product liability insurance cover?
It covers your legal liability, and the cost of defending a claim, where a product you supplied is alleged to have caused death, personal injury or damage to private property. Cover responds whether the defect is in manufacture, design, or the instructions and warnings that came with the product. It does not cover the cost of the faulty product itself, or a product recall, which are separate covers.
What does the Consumer Protection Act 1987 say?
The Act makes producers strictly liable for damage caused by a defective product. A product is defective when its safety is not what people are generally entitled to expect, judged on how it was marketed, its instructions and warnings, and what it was for. The claimant does not need to prove negligence, which makes these claims easier to bring than an ordinary negligence action.
Who can be held liable for a defective product?
Liability can fall on the producer, on an own-brander who holds itself out as the producer by putting its name on the product, and on the business that imported the product for sale. A supplier further down the chain can also be liable if it cannot identify who supplied it. This is why product liability is not just a manufacturer’s concern; it reaches retailers, wholesalers and importers.
Is there a time limit on product liability claims?
Yes. There is a three-year period for bringing a claim, running from when the damage occurred or the claimant became aware of it, and an overall long-stop of ten years from when the product was put into circulation, after which a claim under the Act cannot be brought. The long-stop is one reason keeping records of what was supplied, and when, matters.
Getting the cover right
Product liability usually sits alongside public liability in a commercial policy, and the right limit depends on what you make or sell and to whom. A broker can make sure the cover matches your products and your place in the supply chain. To review your commercial cover, get a quote or speak to the team.