Do I Need Product Liability Insurance?

Do you produce, distribute, or sell products to the public? If so, you may need product liability insurance. For example, a plumber rarely sells a product without installing it. However, what about that one-off customer who can’t find the part he needs, but you can easily get it for him at your plumbing supply? Supplying that product without installation can expose you to product liability.

Although your public liability policy covers many risks, not all public liability policies provide protection for product-related losses. You might only occasionally sell a product, but if one of your products causes an injury or property damage, you’ll need product liability cover.

Insurance companies design product liability cover to protect you against negligence, allegations from use, or even the misuse of your products. The policy also protects against allegations of flaws in the manufacture of your product, a common claim against product creators.

Which Businesses Need Product Liability Cover?*

Any business that produces, supplies, or sells products needs this important cover. Even absent any negligence on your part, your product liability cover can provide an investigation, defence and settlement of your covered claim.

Those who develop and sell products, by law, owe the consumer a duty of care against foreseeable risks when consumers use the product as expected. However, even in cases where consumers misuse products, you may face negligence allegations of design or failure to adequately warn of hazards. To defend your organisation, you’ll need legal expertise, including expert witnesses. This investigation and defence is expensive. Your product liability insurer has a team of lawyers skilled in defending product liability claims, which means you’re represented by the appropriate legal team for the type of allegation against you.

What Kind of Product Liability Costs Can I Expect?*

Your cost will vary based on the following factors.

• The product you sell and how hazardous that product. For example, if you manufacture and distribute golf clubs, you face less risk than a business manufacturing water heater unit igniters.
• The amount of product you sell. Your annual sales revenue is a key factor in rating your product liability cover.
• Your claim history. All insurers will want a minimum of three years of your organization’s loss history. A new manufacturer may find it harder to locate adequate cover than a designer who’s been building products for years and can disclose historical losses.

Even a small product-related stumble can cause years in litigation. Work with an insurance broker who has access to several insurers skilled in writing product liability cover. Call Public Liability Insurance Australia so that we can help you find a suitable policy for your unique business risks.