What is Product Liability Insurance UK?
Product liability insurance is a type of business insurance that protects against claims that a product caused injury or property damage. Businesses need product liability insurance that design, make, repair or sell products.
It covers two main types of costs associated with product claims: legal defence costs and compensatory damage payments to injured parties. This can include court-awarded amounts or settlements arranged through lawyers.
Product liability insurance is important to protect against claims of faulty products that caused injury or damage. Customers would usually make these claims. Product liability is important for businesses large and small. And the relatively cheap cost of a product liability insurance quote makes this type of business insurance one of the best to buy. Plus, it’s relatively easy to compare quotes online as many product liability insurance companies offer cover in the UK.
What does product liability insurance cover?
Product liability insurance cover protects a business that produces, designs or sells a product in case it causes property damage or personal injury to a third party. This could include a product you’ve manufactured or a product from outside the EU you’ve branded as your own and sold to customers.
Product liability pays for both the cost of any compensation a court awards against you (or any settlements out of court) and any legal costs you incur defending your business. As a result, this key type of business insurance helps a business stay financially solvent if there’s a product claim against your company.
Product liability won’t cover any claims for injury or property damage caused by you or your employees due to negligence. For this, you need public liability insurance.
It also won’t cover any injuries or illnesses incurred by your employees. So if you hire any staff, you’ll need employers’ liability. This is a legal requirement for employers in the UK.
And finally, product liability won’t cover professional mistakes that lead to a client’s financial loss. Therefore, anyone offering professional advice or designs as a service should also look into professional indemnity insurance. This protects against claims made by your clients of financial loss resulting from a business’s professional negligence or mistakes.
Who needs public liability insurance?
A business that designs, makes, manufactures, repairs, supplies or sells a product could need product liability insurance.
According to the CII, companies that simply sell a product can even be held liable for defects. The Consumer Protection Act 1987 states that businesses can be held liable for faulty products sold for private use even if they didn’t manufacture them. This could occur when a business sells a faulty product, and the manufacturer has gone out of business or cannot be identified. In that case, the seller could be liable for faults.
The Consumer Protection Act 1987 also covers goods imported from outside the European Union.
How much does product liability insurance cost for a small business?
Product liability insurance for small businesses is often wrapped up with public liability insurance. The two may be sold together in one policy, referred to as ‘public and product liability insurance’. Combined public and product liability insurance costs roughly £120-£130 per year for a typical small business in the UK.
However, costs vary from one business to the next. This is because insurance rates depend on many factors, such as the industry, business size and area of operation (e.g. doing business outside of the UK leads to higher insurance rates).
Many insurers essentially provide product liability for free if it’s included in a public liability insurance policy. Standalone product liability insurance policies start from as little as £78 a year.
Compare product liability insurance UK
Most of the large comparison websites in the UK provide product liability insurance, often sold together with public liability. As a result, comparison sites are a useful tool for getting quotes from multiple providers at once.
Another option is using an insurance broker. Brokers occupy the middle of the insurance market, sitting between customers and insurance providers. They have a unique relationship with both, helping to provide customer service and market insight to their customers and helping bring in new business for insurers.
However, brokers charge a fee for their service but still are used by many businesses who look for advice or access to insurers who won’t sell directly to customers.
It’s also possible to head straight to an insurance company in some cases, whether through their website or phone lines.
Insurers may offer the best prices through their own sales routes, whether over the phone or online, as they don’t have to pay a cut to brokers or aggregators. So if you know what you want, don’t be afraid to approach them.