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Blog: June 28, 2021

Product Liability Insurance & Its Benefits


Owning a business that sells products to the public is an exciting venture but can leave you prone to some legal troubles if you do not take out the right insurance. Many businesses will be quick to take out professional liability and property insurance, protecting themselves against negligence claims and building damage. However, these are not the only types of insurance that businesses need to consider.

If you are selling products to the public, there is a chance that these products could cause damage to a person or property outside of your control. If you do not have insurance to cover this damage, your business could be sued. Product liability insurance is taken out by businesses to protect themselves in this unfortunate circumstance. Wondering ‘what is product liability insurance?’ This article will help you to develop an understanding of this type of insurance and the benefits it could have for your business, as well as how to choose the best policy.

Product Liability Insurance & Its Benefits

What is product liability insurance?

In simple terms, product liability insurance is a type of business insurance that will cover compensation claims if someone is injured, or if a property is damaged, by a product that your business has sold.

Even if your business has not manufactured the products, you may still be held accountable for any damage that is caused by them. This leaves you vulnerable to large compensation costs as the manufacturing process, which largely determines the safety of the products being sold, is out of your control. You may not know that a product is harmful until it causes damage. Product liability insurance will ensure that your business is not impacted by this financial cost and that the affected party gets the correct compensation for any harm that is caused.

You will be held responsible for damage caused by the products if:

  1. You have manufactured the products
  2. The products bear the name of your business
  3. Your business has repaired or refurbished the products
  4. The product manufacturer cannot be traced or has gone out of business

Compensation claims take into account any time that has been consumed by damage or injury, medical costs, repair or replacement of goods and the amount of trauma that has been caused by the incident. For this reason, the final claim price can be exceptionally high. This is a problem for any business and could place extra stress on your shoulders if you cannot afford to pay.

Cover claims without impacting the business

If you have product liability insurance, you will be able to fully compensate claim victims without the cost impacting your business or personal finances. This creates a safety blanket for business to fall back on in these worst-case-scenario type situations. Having the safety blanket of product liability insurance for your business will allow you to carry on, without worrying about any unexpected costs that may crop up.

Protection against mishaps

Even if you do absolutely everything to prevent your products from causing harm, mishaps can happen along the production line that are completely out of your control. These could include:

  • Problems with packaging
  • Design defects
  • Insufficient warning labels
  • Manufacturing or production flaws

With so many steps included in the development of one product, it is difficult to cover everything and ensure that all processes are carried out correctly. Product liability insurance protects you from the response to these mishaps and will cover payments that must be made for mistakes that were not your fault.

Business reputation

As a business, you must do all that you can to ensure that your customers are satisfied with the products that you sell and the experience that they receive. Being unable to pay out a claim could land you in hot water with the press, which could be disastrous for your business reputation. Generally, the quicker that a claim can be settled, the less it will impact your business. Product liability insurance will ensure that your business can quickly solve the claim and that the customers affected are satisfied with the outcome.

How much product liability insurance cover do I need?

The level of product liability that you take out will depend entirely on the products that you sell and the potential damage that could be caused. The more dangerous that your products are, the more likely they are to cause significant damage to a customer so, it is recommended that you take out a higher level of insurance.

It’s always better to be safe than sorry and apply for more cover than is necessarily needed. This could help to prepare your business for unexpected costs or large injuries that could not be foreseen. Taking out a high level of insurance will be costly but, it could just save your business from financial ruin.

How to choose the best product liability insurance

Choosing the right product liability insurance is an essential part of being able to fully experience the benefits that it offers. The easiest way to get the cover is to include it as part of your general business insurance. The best insurance policies will cover your business for any damages caused by products and will offer protection up to a high cost (most claims are in the six-figure ballpark!). <a href=”https://www.arkwrightinsurance.co.uk/liability-insurance/product-liability/”>Our product liability cover</a> offers payments of up to £10 million, but this can be lower depending on the type of products that you sell.

If you would like to know more about the fantastic insurance policies that we offer, contact us today or use our online quote form to get your free insurance quote. Don’t forget to share this article with your contacts too!


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