AT A GLANCE
How the cover works
Product Liability insurance protects against legal liability when a product causes accidental injury or property damage. Exposure can arise from manufacture, importation, distribution, sale, repair, labelling, packaging or modification.
Underwriters need to understand what is supplied, its end use, safety-critical features, customer industries, quality controls, exports, contractual terms and the traceability of batches and suppliers.
COVER
What may be covered
- Compensation for bodily injury caused by an insured product.
- Compensation for damage to third-party property caused by an insured product.
- Legal defence, investigation and expert expenses where the policy responds.
- Products supplied, sold, repaired or distributed within the declared business description.
- Selected completed-operations exposures where included.
Cover varies by insurer and applies only as stated in the schedule and policy wording.
BOUNDARIES
Common exclusions and limitations
- The cost of recalling, replacing, repairing or refunding the defective product itself unless specific recall cover applies.
- Known defects, deliberate non-compliance and products supplied contrary to declared restrictions.
- Pure financial loss where no covered injury or property damage occurred.
- Aviation, automotive, medical, pharmaceutical or other safety-critical uses not specifically accepted.
- Claims brought in excluded territories or jurisdictions, particularly North America where restrictions apply.
This is not a complete list. The quotation, schedule and full wording determine the actual cover.
CLAIMS IN PRACTICE
How a claim might arise
01. A component fails after installation and causes fire damage to a customer’s premises.
02. Contaminated food causes illness among consumers and compensation claims follow.
03. An imported electrical product overheats and damages third-party property.
These scenarios are illustrative only and do not confirm that a particular claim would be covered.
CHOOSING COVER
Questions worth resolving
- Map the full supply chain and clarify whether the business is manufacturer, importer, distributor or retailer.
- Record product standards, testing, quality assurance, batch traceability and complaints.
- Check territorial and jurisdictional limits against every sales channel, including online exports.
- Review contractual indemnities and hold-harmless agreements with suppliers and customers.
- Consider Product Recall where the cost of withdrawal and replacement could be significant.
CONNECTED RISKS
Related protection to consider
- Public Liability for incidents arising from premises or ongoing activities.
- Product Recall for withdrawal, replacement and crisis-management costs.
- Professional Indemnity where design, specification or advice creates financial loss.
- Marine Cargo and stock cover for products in transit and storage.
QUESTIONS
Frequently asked questions
Do retailers need Product Liability?
They can face claims as part of the supply chain, especially for own-brand, imported, altered or untraceable products.
Does it pay to replace a faulty product?
Usually not under standard Product Liability; the product itself and recall costs commonly require separate consideration.
Are exports covered?
Only within the policy’s territorial and jurisdictional scope. North American exposure often requires specific disclosure.
What limit is appropriate?
It should reflect potential injury severity, distribution volume, end use, accumulation and contract requirements.