Product Liability Insurance for Online Retailers
For businesses that manufacture products, sell them or deal with order fulfilment, it's vital to know about product liability insurance.
What is product liability insurance for?
Product liability insurance protects against claims of personal injury or property damage caused by products sold or supplied through your business. It is designed to help protect your business by ensuring that if this happens, you don't have to pay any compensation, legal fees or court costs. Manufacturers, distributors, suppliers and retailers could all be liable if a product or a component part causes injury or damage.
So how do I know if my business needs product liability insurance?
Here are some of the situations where a business might need product liability insurance:
Any company that sells a product with their business or brand name on it.
Any firm that manufactures a product.
Any business that imports products from outside of the European Union for sale in the UK.
Manufacturers and retailers that supply own-brand products.
Any business that repairs, alters or services an existing product.
Someone who repurposes or rebrands an existing product.
Importers of products from places where the safety requirements differ from the country it is sold in.
In addition to this, if the actual manufacturer has gone out of business or cannot clearly be identified the seller of the product could be held liable.
Exceptions to consider
Not every business will need product liability insurance. For example, a consultancy business provides a B2B service rather than a product and consequently will not require product liability insurance.
Retailers and duty of care
Retailers and distributors tend not to be held directly responsible in a product liability claim, but are still responsible for providing a duty of care to their customers. This means that customers must be given clear instructions on how to safely use a product and made aware of any risks that can occur when using the product in its intended fashion.
Why you need to maintain your product liability insurance
A customer that experiences injury due to a product fault has three years to bring a compensation claim against a manufacturer. In some instances, the timeframe can be even longer. This means that businesses should maintain their cover even if they pause or cease operations. Additionally, there are no legal limits for a maximum cost claim, with any customer claim being assessed on an individual basis and the judge calculating a suitable figure depending on the scale of loss or injury incurred. Businesses are wise to ensure they have a generous level of cover in place accordingly, to provide protection against the risk of any claim.
What to look for when buying product liability insurance
Some products will naturally have greater potential risks to customers than others, so do ensure that your policy has adequate cover in place and check carefully for exclusions and stipulations, for example when it comes to quality control. A good broker can help you to find the right product for your business needs.
Find out more at: https://www.gov.uk/guidance/product-liability-and-safety-law