If your business designs, produces or supplies a physical product, even if you don’t make a charge for the item you are giving away, you should have the protection of Product Liability Insurance.
Product Liability Insurance is designed to provide compensation against:
- Damage or loss caused by a faulty item
- Claims for personal injury resulting from the faulty item
- Design flaws to the item that were not identified during production
But if I didn’t make the item…
Even if the item was not made by your business you can still be responsible for faults with the product that cause injury or damage. One of the most common occurrences happen where the product manufacturer cannot be identified or has gone out of business, loss, damage or injury claims may then be made against the supplier or retailer.
Where products are made outside of the European Union or in North America or Canada you should seek specialist advice from an insurance broker as not all Product Liability Insurance policies will include these regions in their territorial limits.
There is also a higher chance you will be held responsible for faulty items if:
- The item carries your logo or business name or contact details
- You change the product in some way from its original design before selling the item
- You refurbish the item and then sell it to consumers or businesses
How much cover should I buy?
Well this will very much depend on the item you are selling, where you are selling it and who you are selling it to. We’d generally recommend the Product Liability Insurance carry the same limit as your Public Liability Insurance cover, (you can see our blog about Public Liability Insurance).
An insurance broker will give you specialist advice if the item could be considered dangerous, has small parts, is designed for young children or uses heat or propulsion as the limits and types of cover may need specialist insurance cover.
Other things to consider
You can protect yourself further by keeping good records of where items you supply were purchased from, including full addresses and contact numbers. You should also ensure that should items be faulty that the manufacturer has provided a means for consumers to return the items directly to them.
Where items are more dangerous and require instruction you can reduce the likelihood of injury or a claim against you by demonstrating how to use the product to customers and running through the instructions that the manufacturer has provided with the customer before they take the produce away with them, again keep a record to show that you undertook this instruction.
Finally bear in mind that Product Liability Insurance will not cover bad workmanship, so ensuring that the goods you purchase to resell are of a good quality and are made well is important too.
Would you like to know more about Product Liability Insurance?
We are experienced and friendly insurance brokers and we’d be delighted to have a no obligation conversation with you. You can call us on 01233 512548 or email julie@cascadeins.co.uk If you prefer we can call you, please register your details on our contact form and we call you back.
