Product Liability Insurance

Product Liability Insurance protects businesses against claims arising from products they manufacture, supply or sell. It covers legal costs and compensation if a product causes injury to a person or damage to property due to a defect, fault or safety issue. This type of insurance is especially important for businesses involved in producing, distributing or selling physical goods, helping protect against potentially costly claims.

Product Liability Insurance is important for any organisation that makes, supplies or sells products to customers. If a product causes injury or property damage, a claim could arise regardless of the business’s size or role in the supply chain. Organisations that may need product liability insurance include:

• Manufacturers: To cover claims arising from faults or defects in products they produce
• Wholesalers and distributors: to protect against liability if a supplied product causes harm
• Retailers: as sellers can be held responsible even if they didn’t manufacture the product
• Importers: who may be treated as manufacturers under product liability law
• E‑commerce businesses: to cover products sold online and shipped to customers
• Businesses supplying branded or own‑label products: where liability may rest with the brand owner

Without Product Liability Insurance, your business could be exposed to significant financial risk if a product you supply causes injury or property damage. Even if the issue wasn’t caused directly by you, legal responsibility can still fall on your business and the costs of defending or settling a claim can be substantial. Potential consequences include:

• Legal costs
• Compensation claims
• Financial strain
• Reputational damage
• Supply chain pressure

Product liability insurance isn’t legally required, but many businesses are contractually required to have it and it’s strongly recommended due to the potential cost of claims.

It typically covers legal defence costs and compensation arising from injury or property damage caused by a defective or unsafe product.

Yes. Under UK law, retailers, distributors and importers can still be held liable even if they didn’t manufacture the product.

Yes. Importers may be treated as manufacturers, making Product Liability Insurance particularly important for imported goods.

Standard policies do not usually cover recall costs unless a specific product recall extension is added.

Product Liability Cover is often included within a Public Liability policy, but this depends on the insurer and the nature of your business.

Yes, Product Liability Insurance can cover products sold online, including those shipped directly to customers.

Most physical products can be insured, although high‑risk or specialist products may require bespoke terms.

Cover levels depend on the type of product, potential severity of claims and any contractual requirements. A broker can help assess suitable limits.

Some policies can include overseas cover, particularly for exports, though territorial limits and conditions will apply.

Product liability claims in the UK are commonly made under the Consumer Protection Act 1987 and negligence law, which can hold suppliers, sellers and importers responsible for defective products.

Yes. Claims can sometimes arise long after a product has been sold, which is why continuous cover is important.

Some policies may provide cover for second‑hand or refurbished goods, but this usually depends on the nature of the products and must be disclosed to insurers.

Yes, handmade or bespoke products can be insured, although insurers may assess the risk based on materials used, production methods and end use.

Food and drink businesses can be covered, but these products may require specialist underwriting due to higher risk factors.

Product Liability typically excludes product recalls, guarantees, faulty workmanship without resulting damage and known defects unless extensions are added.

Yes. Product Liability Insurance is often included within a Public Liability or Commercial Combined policy, depending on your business activities.

Yes, Product Liability Insurance can cover products sold through websites, online platforms or third‑party marketplaces, subject to policy terms.

Yes. Claims can still be brought against your business as part of the supply chain, even if another party is insured.

If a claim is made, your insurer typically handles legal defence, investigations and settlement negotiations, subject to policy conditions.

QMT Commercial have a wide panel of liability insurers and will endeavour to source cover for more complex or higher‑risk products.