What is product liability insurance?

Product liability insurance is a type of insurance that can help to protect business owners if a person is injured, or their property is damaged, by a product that your business supplies. Learn more about product liability insurance, what it covers, and how it compares to public liability insurance. 

What is the difference between public and product liability insurance?

Though they sound similar, product liability insurance covers claims made as a result of injury or damage specifically caused by any products you supply.

Meanwhile, public liability insurance covers claims made by members of the public, including clients, against injuries or property damage caused by your business activities. Both cover types are often sold together. 

What does public and product liability insurance cover?

Product liability

Product liability insurance can help you pay compensation for injuries caused by your product, or for damage to property caused by your product. It can also help you to pay legal fees if you are sued.

Public liability insurance

Public liability insurance covers business owners for the cost of compensation for injury or damage caused by their business activities. Claims could be a result of an incident on or off your business premises – anywhere a member of the public could engage with, or be affected by, the work your company carries out.

The claimant does not need to be a customer of your business to be able to take legal action. Public liability insurance can cover any member of the public, including clients and contractors. Employees and interns are covered separately by employers’ liability insurance.

Why do I need product liability insurance?

Costs arising from legal action over injury or damage caused by a faulty product could have a serious impact on your business. Product liability insurance can help to offer protection from these costs and could be valuable for any business that deals with physical products.

For example, a bike mechanic could service a bike that later fails on the road, leading to the cyclist being in an accident. Or, a garden equipment hire firm may supply an item with faulty wiring, resulting in accidental injury.

What kind of businesses need product liability insurance?

Any business involved in the supply chain for products may want to consider product liability insurance. As well as companies that design and manufacture physical products, this includes businesses that:

  • Repair and maintain products - for example, mechanics and electricians
  • Sell products - such as retailers or office supplies companies
  • Offer products for free - such as a restaurant that gives away toys for children. 

Yes, you can be the subject of legal action if you supply a product that causes injury or damage, even if you didn’t design or manufacture it. 

Do I need product liability cover if I sell second-hand products?

You may want to consider product liability cover if you sell second-hand products, because the product may be hard to trace back to its manufacturer. If you refurbish or repair second-hand goods, which are then found to be faulty and cause harm, you can also be liable for any damage or injury caused.