Product Liability Insurance Australia

What is Product Liability Insurance?*

Product liability insurance is a type of business insurance that can cover the cost of a claim made when one of customer or third party is injured or suffers illness or property damage caused by a product that you have sold to him.

It is an essential cover for any business that is involved in the production, supply or sale of products. No matter what type of product you sell, there is always the potential for something to go wrong.

Claims of personal injury, illness or property damage resulting from defective products may result in significant financial claims for compensation.

Even if you and your product are found not to be at fault, you may still incur considerable legal costs in defending a claim against you. In some cases, you could even be found liable for damages when you are not the manufacturer of the product.

While you are most likely to be subject to such claims for products that you manufacture, you may also be liable if you have repaired or refurbished a product you sell or if it bears your company name. You could also be found liable if the manufacturer of the product is no longer in business (or otherwise cannot be traced) or is located in another country.

Product liability insurance is designed to protect you from financial losses resulting from such claims; including payment of your legal expenses and compensation you are ordered to pay if you are found to be legally liable.

Product Liability Insurance Explained Simply*

Product liability insurance may protect sole traders, contractors, and small businesses from claims of certain types of negligence in relation their products. For example, claims could arise if their product injured someone or damaged their property.

Here are examples of some of the business activities that can lead to product liability claims.

• Supplying food or drinks can cause illnesses such as food poisoning.
• Supplying clothing, appliances, equipment, tools, or furniture can cause an injury or damage property.
• Supplying mobile phone or computer hardware accessories that do not perform their function as could be reasonably expected, resulting in damage to the mobile phone or computer.

Whether your products are used properly or improperly, claims can arise. Almost any type of equipment or product you supply can lead to an injury or property damage.

What Does Product Liability Insurance Cover?*

Product liability insurance may protect your business by reimbursing you against compensation claims for injury or damages caused by products you sell as well as your legal costs in investigating and defending such claims.

Depending on the circumstances, it may protect your business when a person suffers an injury or illness or their property is damaged (that they argue was caused by a fault in a product that you sold them) and they take legal action against your business to recover any losses they have suffered.

Even with all care taken to ensure that the products you sell are safe, accidents can always happen.

In many cases (when physical injury or major property damage occurs) investigating, legally defending, or having to settle a claim may result in a significant financial burden which could result in the closure of your business or even personal bankruptcy.

This is why product liability insurance is vital for protecting your business and gives you peace of mind knowing that you are covered.