You should consider product liability insurance if your business designs, manufactures or supplies a physical product that is sold or given away for free.

Your business may be held legally responsible for any injuries to people or damage to property caused by a faulty product.

You can be held liable for faulty products even if you did not manufacture them. You may be liable for compensation if:

• your business’s name is on the product
• your business repairs, refurbishes or changes a product
• you imported the product from outside the European Union
• you cannot identify the product’s manufacturer, or the manufacturer has gone out of business

What it covers

Product liability insurance protects you against the cost of compensation for:

• personal injuries caused by your faulty product
• loss of or damage to property caused by your faulty product
• unforseeable circumstances such as product faults that your quality control system could not identify

Product liability insurance may not cover you for:

• faulty products resulting from bad workmanship
• financial losses to a business or person caused by your faulty product
• If you do not manufacture the product but you distribute it, you should be covered if you can show that:

• the products were faulty when they were supplied to you
• you gave customers adequate safety instructions and warnings about misuse
• you included terms for the return of faulty goods to the manufacturer
• your supply contact with the manufacturer covers product safety, quality control and returns
• you have good quality control and record-keeping systems