Product liability insurance

The Get It Right Initiative (GIRI) in 2024 published 'The GIRI Insurance Guide: A perspective on risk management for construction projects' which describes product liability insurance as protecting 'against liability for injury to people or property arising from the products (you) supply, manufacture or in some cases, import.'

The Association of British Insurers (ABI) defines in more detail what Product Liability Insurance is, why it is needed, what is covers and where it can be purchased:

'Product liability insurance covers the cost of compensating anyone who is injured by a faulty product that your business designs, manufactures or supplies...'

'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 (you)r 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'

Product liability insurance can be bought directly from an insurer or from a specialist broker through the British Insurance Brokers’ Association (BIBA). Most businesses take out policies that cover them for compensation claims of between £1 million and £5 million.

For more information about Product liability insurance and other insurances visit The Association of British Insurers (ABI)

[edit] Related articles on Designing Buildings

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• Joint and several liability.
• Liability.
• Liability for building design.
• Negligence.
• Nuisance.
• Quasi-delict.
• Reasonable skill and care.
• Strict liability
• Trespass.