# Bionic’s Guide to Product Liability Insurance Author: Pal Sinha, Barnali Author URL: https://financedigest.com/author/pal-sinha-barnali Published: 2021-10-11 Category: INSURANCE Category URL: https://financedigest.com/category/insurance Meta Title: Understanding Product Liability Insurance Meta Description: Learn about product liability insurance and why your business may need it. Protect yourself from legal claims and compensation costs. URL: https://financedigest.com/bionics-guide-to-product-liability-insurancehtml ![undefined](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/storyblocks-manager-at-work-as-financial-consultant-talking-to-elderly-people-senior-man-meeting-health-insurance-broker-or-retirement-plan-agent-for-signature-on-agreementsrtrc2c6xv-1736837670026-compressed.jpg) All businesses, large or small, need insurance. Knowing the right type of insurance to get for your business is critical to make sure you are covered for any eventuality. If there is a risk that your business could come up against legal claims for compensation from customers or members of the public, then liability insurance is something you may want to consider. And if your business is involved in the design, production or sale of products, [product liability insurance](https://www.financedigest.com/two-thirds-of-consumers-would-prefer-to-deal-with-a-single-provider-for-insurance-products.html "Two-thirds of consumers would prefer to deal with a single provider for insurance products") could be particularly useful. This guide will help you to understand what product liability [insurance is and decide whether your business needs](https://www.financedigest.com/breaking-down-the-types-of-insurance-you-need.html "Breaking Down the Types of Insurance You Need") it. **What is product liability insurance?** Product liability insurance is a type of [business insurance](https://bionic.co.uk/business-insurance/) that covers the cost of compensation if someone is injured or if their property is damaged by a product that you have sold, manufactured, designed or even just supplied. You may be held responsible for a claim relating to a product even if you were not the original manufacturer or supplier. If, for instance, you have refurbished or repaired a product or imported it, you could be liable for damages caused by that product. You are also legally responsible for a [product if it has your company name](https://www.financedigest.com/volkswagen-to-name-bentley-production-chief-as-new-cariad-head-sources.html "Volkswagen to name Bentley production chief as new Cariad head – sources") on it, whether or not you manufactured that product. **What does product liability** [insurance cover?](https://www.financedigest.com/japan-insurers-to-maintain-cover-for-lng-vessels-in-russian-waters.html "Japan insurers to maintain cover for LNG vessels in Russian waters") In general, product liability insurance will cover legal fees and compensation costs incurred if a member of the public is injured or their [property damaged](https://bionic.co.uk/business-insurance/guides/property-maintenance-insurance/) as a result of your product. If you design, sell or supply products to [customers – or even import them for other businesses – it could be an invaluable part of your business insurance](https://www.financedigest.com/customer-engagement-in-the-insurance-sector.html "Customer engagement in the insurance sector") package. Product liability [insurance in the UK will typically cover you for claims related](https://www.financedigest.com/2020-the-paradoxical-year-that-has-reshaped-the-future-of-motor-insurance-and-related-sectors.html "2020: The paradoxical year that has reshaped the future of motor insurance and related sectors") to: - Customer injuries caused by your faulty product - Loss or damage to a customer’s property [due to your faulty product](https://www.financedigest.com/apple-likely-to-cut-iphone-13-production-due-to-chip-crunch-bloomberg-news.html "Apple likely to cut iPhone 13 production due to chip crunch -Bloomberg News") - Undetected faults such as defects that your quality control system failed to pick up There are a number of other instances in which product liability [insurance might cover](https://www.financedigest.com/app-based-insurance-cover-for-millennials-possessions-and-experiences-back-me-up-powered-by-ageas.html "APP-BASED INSURANCE COVER FOR MILLENNIALS’ POSSESSIONS AND EXPERIENCES: ‘BACK ME UP’, POWERED BY AGEAS") you, but where you would have to check with your insurer. This is why it is [important to make sure you get the right policy for your business](https://www.financedigest.com/the-importance-of-intuition-in-business.html "The Importance of Intuition in Business "). Things that could be covered by some – but not all – product [liability insurance policies include claims](https://www.financedigest.com/health-care-systems-show-moderate-decrease-in-liability-claims-find-correlation-between-worker-safety-and-patient-safety.html "Health Care Systems Show Moderate Decrease in Liability Claims, Find Correlation Between Worker Safety and Patient Safety") related to products that are faulty because of bad workmanship, and claims for financial loss caused by your product. **What’s the difference between public and product liability insurance?** Product liability insurance is in fact just a type of [public liability insurance](https://bionic.co.uk/business-insurance/public-liability-insurance/). Or, more precisely, it is a subset of public liability insurance. That means that you may be covered for claims [relating to faulty products as part of your public liability insurance](https://www.financedigest.com/covid-19-insurance-related-litigation-deluge.html "Covid-19 – Insurance Related Litigation Deluge") policy. However, product liability is not always included in a more general public liability policy, so always be thorough when checking with your insurer. Product liability insurance is also sometimes [offered](https://www.financedigest.com/aon-data-empowers-unica-to-offer-flood-insurance-for-5-2bn-canadian-peril.html "Aon data empowers Unica to offer flood insurance for .2bn Canadian peril") as a standalone insurance policy, though it will not cover you for some claims that a more general public liability policy would. **Does your business** [need product liability insurance?](https://www.financedigest.com/reasons-you-need-a-car-insurance-when-driving-in-thailand.html "Reasons You Need a Car Insurance When Driving in Thailand") If your [business supplies products](https://www.financedigest.com/sme-productivity-programme-re-purposed-to-help-businesses-prepare-for-covid-19-economic-recovery.html "SME productivity programme re-purposed to help businesses prepare for Covid-19 economic recovery") to customers, you have a responsibility to ensure they’re safe. Even if you didn’t make a product, you could still be held liable if it was to cause an accident. So, whether you’re the manufacturer, retailer or wholesaler, you’ll need product liability insurance to protect yourself against any claims from a member of the public who has [suffered injury or had their property damaged as a result](https://www.financedigest.com/will-global-commodities-suffer-as-a-result-of-brexit-the-experts-at-easymarkets-think-not.html "WILL GLOBAL COMMODITIES SUFFER AS A RESULT OF BREXIT? THE EXPERTS AT EASYMARKETS THINK NOT!") of your faulty product. If you are a manufacturer of products, it is fairly essential – though not a legal requirement – to get product liability insurance. This is because some of the other companies you trade with may require you to have it. Furthermore, product liability claims against you could be incredibly financially damaging. If you are not a manufacturer, there are still a number of reasons you could be held responsible for injury or damage caused by faulty products that you are involved in selling or repairing. These include if: - Your business has its name on it - You can’t identify the manufacturer - Your [business repairs or changes](https://www.financedigest.com/business-is-changing-is-your-culture-changing-with-it.html "Business is changing – is your culture changing with it?") the product - You imported the product from outside the European Union - The manufacturer has gone out of business Under these circumstances, you would be liable for compensation [costs if the product](https://www.financedigest.com/workplace-planning-software-cuts-costs-and-improves-employee-wellbeing-and-productivity-a-win-win-for-all.html "Workplace planning software cuts costs and improves employee wellbeing and productivity – a win-win for all") you sell causes an accident. **When [might you need to claim](https://www.financedigest.com/why-you-might-want-to-wait-until-age-70-to-claim-social-security-benefits.html "Why You Might Want to Wait Until Age 70 to Claim Social Security Benefits") on a product liability insurance policy?** You would need to make a claim on your product [liability insurance policy if you are asked to pay](https://www.financedigest.com/are-you-getting-what-you-are-paying-for-when-it-comes-to-cyber-liability-insurance.html "ARE YOU GETTING WHAT YOU ARE PAYING FOR WHEN IT COMES TO CYBER LIABILITY INSURANCE?") compensation as a result of injury or damage caused by your product. This may come as a result of a legal claim against you, or because another business in your [supply chain](https://www.financedigest.com/mcdonalds-milkshakes-off-the-british-menu-after-supply-chain-issues-2.html "McDonald’s milkshakes off the British menu after supply chain issues") is seeking compensation from you because of a claim against you. **Is product liability insurance a legal requirement?** No, product liability [insurance is not a legal requirement but it could well stop you from doing business](https://www.financedigest.com/big-data-lowers-insurance-premiums-and-optimises-business-performance.html "Big Data Lowers Insurance Premiums and Optimises Business Performance"). That’s because you may find that other businesses in the [supply chain](https://www.financedigest.com/how-to-create-a-more-efficient-transparent-and-trusted-supply-chain-for-the-gold-jewellery-industry-using-blockchain-technology.html "How to create a more efficient, transparent and trusted supply chain for the gold jewellery industry using blockchain technology") will refuse to work with you if you are not covered against claims brought as a result of faulty products. **How much product** [liability cover does your business need?](https://www.financedigest.com/what-is-premises-liability-coverage-and-why-does-your-business-need-it.html "What is Premises Liability Coverage … and Why Does Your Business Need It?") It is really up to you how much product liability [cover you want to arrange under your insurance](https://www.financedigest.com/how-insurance-providers-are-starting-to-use-adas-data-to-price-cover.html "How insurance providers are starting to use ADAS data to price cover") policy. Most [insurers](https://www.financedigest.com/different-countries-different-insurance-cultures-how-insurers-can-adapt-their-products.html "insurers") will have a maximum amount they will insure up to, typically set at either £5m or £10m. However, the amount of [money you need](https://www.financedigest.com/why-the-world-needs-more-women-controlling-the-money.html "Why the world needs more women controlling the money") to have cover for depends on how serious the claims against you might be. For instance, if your business operates in a field where faulty products are only likely to cause slight damage, then you will not need as much cover as you would if you make products that could cause very serious injury. If you are unsure, always get advice before agreeing on a product liability [insurance quote](https://www.financedigest.com/as-the-cost-of-living-bites-tackling-insurance-quote-manipulation-is-key.html "As the cost of living bites, tackling insurance quote manipulation is key"). **How much does product liability insurance cost?** The higher your insurance cover, the more it will cost. If you take out a policy that has a limit of several million pounds, then your liability insurance could be relatively expensive. However, if you are taking out a policy that only protects you against smaller claims, it is likely to be cheaper. --- This blog is powered by Superblog. Visit https://superblog.ai to know more. ---