Product liability insurance protects businesses against liabilities arising from property damage and personal injury caused by their business ‘products’.

It is of importance to consider what is a ‘product’ for the purposes of your policy or contract for insurance. It is necessary to note that each policy for insurance may have a different construction on what is deemed a ‘product’. However, the general position is that a product is:

  • Anything that has either been manufactured, erected, assembled or installed by your business.
  • Includes any products that have been supplied, distributed, imported or exported by you or on your behalf.

It is necessary to consider the limitations of product liability insurance. There are a number of circumstances that are not covered by product liability insurance. Those include situations where a third party suffers economic loss as a result of a faulty product. If a third party suffers a loss because a product it purchases it not operational or does not function to the expectation provided, this is a situation where your policy for insurance will not extend cover to you for such a loss.

It is also appropriate to know when a claim can be lodged for product liability. Generally, the damage must have occurred at a time that your insurance policy is in place and not as at the time the product was purchased in order for the policy to respond to a claim.

It is of utmost importance to take advise on whether you have the correct product liability insurance. Failure to have the correct insurance may result in significant liability if a claim is lodged against a faulty product which your business has manufactured, assembled or even supplied.