Product liability insurance

There are several types of claim you might face involving your products, for example:

• You’re a furniture manufacturer, and the treated upholstery you’ve added to your pieces causes an allergic reaction in a customer
• You’re a deli owner and have decided to try your hand at making your own mayonnaise and sauces in store which has resulted in several customers getting sick

If someone makes a product liability claim against you, there are a few details you’ll be asked so that your insurer can determine if you’ve done your due diligence as a seller. This includes things like:

• A list of your suppliers
• Any testing you’ve done for the products
• Can you trace the manufacturing of the item?
• What proof of quality control do you have?
• Have you included accurate use and sell by dates on food products?
• Have you got import records for any goods from abroad?
• Can you supply any proof of your supplier’s quality control?

Yes, product liability insurance is tax deductible, as HMRC include insurance as an allowable expense.

Product liability insurance is a part of public liability insurance, but they’re not the same.

Public liability insurance covers the work that you do or services that you provide. Product liability, however, covers physical products or parts that you sell or provide. The type of claims each cover deals with is also different.

Public liability deals with single claims, while product liability claims are in aggregate.

For example, let’s say you’re a baker. If you sell a pastry and one person ends up having an allergic reaction, then that is an isolated incident contained to that one person, so this would fall under public liability.

However, if the entire tray of pastries is contaminated due to a bad batch of eggs sold to you by a supplier, then every item you bake with those eggs is contaminated. If 50 people eat your pastries and end up with severe sickness and claim against your business, those claims are all handled in aggregate, making it a products liability claim.

Yes – you will also be covered for products you distribute as well as those you sell.

However, you will need to ensure that: 

• You’ve carried out the proper safety and quality tests
• You can evidence that the products were faulty when you received them from the supplier
• You gave customers the right safety instructions and warnings about misuse
• You made it clear how the returns process worked for your customers
• You have contractual agreements in place with the manufacturer around product safety, quality control, and returns

No, tradespeople do not need product liability insurance, though it’s still included with your public liability insurance. However, since you’re providing a service, rather than selling a product, you’re more likely to rely on public liability when a claim arises.