INSURANCE GUIDE Product Liability Insurance - what it covers and who needs it |
TL;DR
- Product liability (PL products) insurance covers claims from third parties for injury or property damage caused by products you manufacture, supply, import, or sell.
- It is distinct from public liability, which covers claims arising from business activities - though many PL policies include both sections.
- The Consumer Protection Act 1987 imposes strict liability on producers and importers of defective products - fault does not need to be proved by the claimant.
- Businesses that import products from outside the EU/UK become the legal producer for CPA 1987 purposes and bear the same strict liability as the original manufacturer.
- Standalone product liability insurance is available but most businesses obtain it as part of a combined public and products liability policy.
Last reviewed: June 2026
KEY FACTS | |
| Legal basis | Consumer Protection Act 1987 - strict liability for defective products causing injury or damage |
| Who is liable | Producer (manufacturer), importer into UK/EU, own-brander, and supplier who cannot identify the producer |
| Importers | Businesses importing from outside the UK become the legal producer and bear strict CPA liability |
| Difference from PL | PL covers activities at premises; products liability covers injury/damage caused by products after they leave your control |
| Typical cover limit | GBP 1 million to GBP 5 million per claim; GBP 5 million to GBP 10 million for food, pharmaceutical, or high-risk products |
| Where included | Usually included automatically in public liability policies for most businesses |
What Is Product Liability Insurance?
Product liability insurance covers the legal liability of a business to pay compensation to third parties (customers, end users, bystanders) who suffer bodily injury or property damage caused by a defective or unsafe product that the business manufactured, supplied, imported, distributed, or sold. It is one of the most important liability covers for any business involved in the product supply chain.
The legal framework for product liability in the UK is the Consumer Protection Act 1987 (CPA 1987), which implements the EU Product Liability Directive. CPA 1987 imposes strict liability on producers of defective products - the claimant does not need to prove that the producer was negligent, only that the product was defective and that the defect caused the damage. This makes product liability claims significantly easier to pursue than general negligence claims.
KEY FACTS
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Who Needs Product Liability Insurance?
Any business involved in the product supply chain potentially needs product liability cover. The categories most clearly exposed are:
- Manufacturers: As the producer of the product, the manufacturer is the primary CPA 1987 defendant and bears strict liability.
- Importers: Businesses importing products into the UK from outside the UK (including from the EU post-Brexit) are treated as the producer for CPA 1987 purposes where the original manufacturer has no UK presence.
- Own-branders: Businesses that put their own name or mark on a product manufactured by someone else are treated as the producer.
- Retailers and distributors: Generally not liable under CPA 1987 unless they cannot identify the producer or importer, in which case they become liable themselves. Retailers are wise to hold products liability cover regardless, as claims are frequently initiated against the retailer first.
- Online sellers: E-commerce businesses selling products face the same exposure as physical retailers.
Products Liability vs Public Liability
Public liability covers claims arising from the business activities at or from the business premises. Products liability covers claims arising from products after they have left the business control - after sale, distribution, or supply. The two covers are complementary and most commercial liability policies include both in a combined public and products liability section.
Some policies include products liability automatically within the PL section; others treat it as a separate section with its own limit. For businesses with significant product exposure, checking the products liability limit separately from the PL limit is important - the two may have different indemnity limits.
How Much Does Product Liability Cost?
For most businesses, product liability is included automatically within a combined public and products liability policy at no additional premium. Standalone product liability policies are available for businesses without a PL exposure (online retailers, for example). Premiums depend on the product type, annual turnover, and distribution channels. High-risk products (pharmaceuticals, medical devices, children toys, food) attract higher premiums and more restricted cover.
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Disclaimer: This guide is for general information only. Kael Tripton Ltd is not authorised or regulated by the FCA. Always verify details with an FCA-authorised insurer or broker before purchasing. |
Frequently Asked Questions
Does my public liability insurance cover products I sell?
It depends on the policy. Many combined public and products liability policies include both activities-based PL and products liability in a single section. Some policies separate the two with distinct limits. Check whether your PL policy includes a products liability section and confirm the indemnity limit that applies to products claims.
If I import products from China, am I liable as the manufacturer?
Under the Consumer Protection Act 1987, if the original manufacturer has no presence in the UK, the importer of the product into the UK is treated as the producer and bears strict CPA liability. This means UK importers from China (and other non-UK manufacturers) are in the same legal position as if they had manufactured the product themselves. Product liability insurance is essential for UK importers.
Does product liability cover product recall costs?
Standard product liability insurance covers compensation for injury and property damage caused by a defective product. It does not cover the cost of recalling or withdrawing defective products from the market. Product recall insurance is a separate product that covers the logistical costs of a recall (communication, retrieval, disposal, and reimbursement to retailers). Some specialist combined policies include limited recall cover.
What is the CPA 1987 damage threshold?
The Consumer Protection Act 1987 imposes strict liability for property damage above GBP 275. Damage of GBP 275 or less is excluded from CPA strict liability. Personal injury claims have no threshold - any physical injury caused by a defective product can give rise to a strict liability claim under the CPA.
Does a product need to be sold to generate a products liability claim?
No. A product that is given away, supplied as a sample, or loaned can still generate a products liability claim if it is defective and causes injury or damage. The CPA 1987 covers supply in the course of business, which includes free samples and promotional gifts as well as commercial sales.
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