If you run a small business or are the manufacturer, you will be liable if someone is injured or their property gets damaged because of your business.
Here comes product liability insurance. Product liability insurance protects your business against a claim’s legal and compensation costs.
Product liability insurance is essential if you sell goods or manufacture products. If any claim takes place, most of the businesses can not afford the unexpected costs.
So, holding product liability insurance is an important aspect of protecting the small business that you have built.
So, if you are interested to know more about product liability insurance then you are on the right page.
Here, in this blog, I will wrap together what is product liability insurance, what product liability insurance covers, how much product liability insurance costs for small businesses, who needs product liability insurance, and how to get product liability insurance in the UK.
Let’s dive into the deep!
What Is Product Liability Insurance?
Product liability insurance UK is a type of insurance that will protect your business if any legal claim occurs.
If someone gets injured or their property is damaged because of your business’s product, distribution, or repair.
The occurrence may not happen by yourself bt related to your business. In simple words, the product liability insurance you are not costly lawsuits if someone gets injured because of your business products.
This insurance is intended to offer an indemnity to the insured person in the event of a claim being brought to him.
It covers legal and financial liabilities because of bodily injury, illness, accidental death to a third party, and third-party property damage.
What Product Does Product Liability Insurance Cover?
Product liability insurance will protect you against legal costs and compensation if a customer claims damages or injury because of the faulty products you sold.
It is very important to have product liability insurance in place even if you view your business as a hobby or a side project.
For example, if you design and craft jewellery and sell those items on Etsy even then you must hold product liability insurance.
This may not be your main source of income, but even then you bear the same responsibilities as a larger company.
Product liability insurance protects you against the cost of claim and compensation for:
- Personal injuries or damages because of the faulty product you sold to them
- Any loss or damage to the property of the customer because of the faulty product you sold to them
- If any circumstances arise such as your faulty product that your quality control could not identify
- The product harms the customer even if it was not your intention
- There is something wrong with the design of the product
- If there went something wrong during the manufacturing
- The product didn’t warn regarding potential ham
How Much Product Liability Insurance Costs for Small Businesses
The cost of product liability insurance depends on the type and size of the small business you run.
Factories manufacturing products will need different cover from a restaurant, cafe, or retailer.
Also, if a business is producing millions of units, it needs to pay far more than a sole trader or small retailer.
For small businesses, the cost of product liability insurance may range between 50 pounds to 500 pounds or more per year. The cost completely depends on your profession and what coverage you want from the policy.
Cafes, clothing and craft retailers, and simple service providers including cleaners, dog walkers, and instructors seek PL with minimum coverage because in these industries, the chances of damages are typically limited.
For high-risk small businesses such as transportation operations, builders, and event planners may seek higher coverage. because in these industries the chances of claiming compensation are very high.
These industries are more associated with unexpected harms, damages, and injuries to customers, or their properties.
The annual cost for the product liability insurance may exceed 500 Pounds for these small businesses.
Who Needs Product Liability Insurance?
Not every business needs product liability insurance.
Holding product liability insurance for small businesses is essential for the industries that produce, distribute, or repair physical products. The product can be widely interpreted.
Suppose, if you produce food items and someone becomes sick because of eating your food product then you want product liability insurance.
Here, I am providing a list of industries that should hold product liability insurance to protect their businesses. You can check that list to ensure whether your company is in the following categories:
- Manufacturing: You will be liable if your company produces something that causes bodily or property damage to someone.
- Distribution: A distributor can be liable if someone gets injured because of the products distributed.
- Retail: A retail shop can be liable for the products that it sells, even if it is not manufacturing the product.
- Construction: General contractors, electricians, plumbers, and others who build the physical structure of a building are liable for job site damage or injury.
- Food: The manufacturer, distributor, and retailer related to the food industry are liable for any food poisoning occurrence. Food poisoning can lead to severe illness and death.
- Beauty and Cosmetology: The manufacturers, distributors, and retailers related to the beauty and cosmetology industry are liable for any allergic reaction, or physical harm because of the beauty product.
- Repairs: If you are in the business of repairing products or goods, and if someone gets hurt because of your work, you can be liable. Repairing goods refers to repairing cars, washing machines, etc.
How to Get Product Liability Insurance in The UK
Similar to other insurance policies, when you want to get product liability insurance you can start by searching on Google. You can research various insurance providers on the internet.
The best way to get product liability insurance is by requesting quotes from a few different insurance providers. Then you can compare and choose the right insurance for your business.
Tips for Small UK Businesses on Product Liability Insurance
Check If You Already Have It
You can check for your General Liability Insurance for your business that provides broad coverage against injuries and property claims.
So, you must check if it has already given you a range of product liability insurance. Most of these policies provide.
So, if you have general liability insurance, check it again and decide whether there is a need for an additional insurance purchase.
Select The Right Coverage Limit
You must look for what amount of coverage the insurance will provide you.
Also, you must check for what areas are covered by the plan. After evaluating these parts, you must choose the right insurance policy for your business.
Negotiate
You should not agree with the quote you are given. You must negotiate for better costs of product liability insurance policies.
You must keep in mind that everything is negotiable before signing the contract.
FAQ
What is public and product liability insurance in the UK?
Ans: Both the public and product liability insurance will protect you against any claim for injury and property damage. However, public liability insurance helps to protect your business if a claim takes place related to your business activities and services.
These include the actions of you, and your employees. on the other hand, product liability insurance covers claims relating to any product you sell, distribute, supply, or manufacture.
Is product liability insurance compulsory in the UK?
Ans: No, product liability insurance is not mandatory in the United Kingdom. But, no matter what precautions you take, there are still chances things go to wrong.
So, it is advisable to hold product liability insurance to protect your business from an unexpected financial crisis.
What is the difference between product liability and product guarantee?
Ans: Product guarantee insurance helps you if there is any problem with the product. Often small business owners purchase product guarantee insurance in conjunction with product liability insurance. It helps them to cover claims for damage or injury related to the product.
Conclusion
Product liability insurance covers the compensation cost if anyone gets injured or damaged by a faulty product manufactured, designed, distributed, or sold by your business.
So, if your small business falls under one of these categories, I advise you to hold product liability insurance. This insurance will protect your business at the time of claim occurrence.
Here, I have provided every aspect related to product liability insurance, you can go through my article. I recommend taking one potential product liability insurance because any harm or injury may occur at any time even after taking all the safety measures.
