What is product liability insurance and who needs it?

Although businesses are not required by law to subscribe a product liability insurance policy, this really may represent a wise choice for many companies.

Product liability insurance policy covers businesses in case their products cause their customers to suffer any kind of harm or injury, in case these products malfunction, have a faulty design, or if something went wrong in any part of the production process. Businesses may be held liable in the possible litigations following such events if they have either designed, manufactured or supplied the products. In fact, businesses may be held liable even if they only have:

- repaired, refurbished or changed the product in any way,

- imported the product from a non-EU-member country,

- their name on the product, and/or if the manufacturer cannot be identified or has stopped production.

So there are really many cases when a product liability insurance may prove to be useful!

Also, business owners should think about the consequences of such events. If a whole batch of products have been affected, because of the production scale, litigations can quickly turn into class-action lawsuits which may cost millions of pounds to liable companies, even before business executives realise something went wrong, somewhere.

Businesses involving in the production of consumer goods at an industrial scale, or dealing with many intermediaries intervening at some part of the production process may therefore be especially interested in product liability insurance policies. Businesses involved in the industrial preparation of food products will also almost always subscribe product liability insurance policies.