As the name suggests this insurance is to cover a product, whatever that may be, against incurring losses to third parties. A good example would be a washing machine or tumble dryer having an electrical fault and starting a fire, which could be very costly. It’s rumoured that the Grenfell Tower fire started from such an event. So the manufacturer would rightly insure themselves for Products Liability.
Does the retailer also need the cover, because the manufacturer has this cover?
Yes, is the quick answer, but only to help pass the claim on to the manufacturers insurer, and this overlap is often called a ‘contingency’ cover. There might be several businesses involved in producing and selling an item, and the claim would normally start with the end user experiencing a problem and issuing a claim against whoever sold them the item. Assuming all parties in the sale process are correctly insured then the claim passes back up the chain until it finds the point of negligence. It might be that point isn’t the original manufacturer, and perhaps one of the other businesses in the chain subtly changed something, or just re-packaged the item, and this might be the reason for the claim.
So what sorts of products need this liability cover and is it a legal requirement?
The legal question is easiest to answer and no, it isn’t a legal requirement, just a very sensible and often cheap insurance to purchase. As for what products should be covered then you must think about the application of the item and what its uses are. It might be easy to think a steel post couldn’t cause anybody any harm, but utilise this in some construction scaffolding and the risks clearly increase substantially.
Perhaps the products have moving parts, or electrical components, and these can have risks such as fire or impact injury to the public. Consumables such as food and drink have obvious risks attached.
Is Product Liability all I need?
No, there can be all sorts of reasons why a claim might suddenly occur, and whilst it might be the product was at fault, it matters why there has been a loss. For example a food containing nuts might do some serious harm to someone with an allergy, but perhaps it’s the lack of warning ‘may contain nuts’ was where the fault lay. There are quite a few other insurances worth considering when supplying products, from Product Recall to Product Contamination, and even Professional Indemnity. It’s worth discussing the product, its application, and potential risks with an insurance professional such as our team at AIC, where we can help identify what covers may be appropriate and get the quotes from the multiple insurers we have available. Visit our website https://aicinsure.co.uk/insurance-scheme/professional-insurance/for more details or just give us a call 01442 242400