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Product Liability Insurance
Product liability insurance provides cover for people who manufacture, distribute or sell, and can protect you from financial damages.
Product liability is an important insurance for many types of business. Anyone involved with the manufacturing or sales of any type of products should consider looking into product liability insurance.
What is product liability insurance?
Product liability insurance covers a business against claims of personal injury or property damage caused by products sold or supplied through that business. It is designed to help protect your business by ensuring that if this happens, you may not have to pay any legal or court costs, or compensation to the injured party, from your own pocket.
Product liability insurance cost
Each business is different so the cost of your product liability insurance quote will depend on your personal circumstances. Some things that may affect the cost of your insurance can include:
- What types of products you sell. Someone selling pillows is likely to pay less than someone selling hunting knives, all else being equal.
- How many products you move. The higher the volume of products you sell, the more likely someone could get injured and the higher your premiums will be. It's a numbers game.
- Where you are in the product chain. A retailer is less likely to be at fault than the manufacturer would be for a faulty item, meaning retailers would pay less as far as that goes.
- The structure of your policy. You can decrease the cost of your policy by choosing higher out-of-pocket costs (excess) and lower benefit limits, and vice versa.
- Your past history. Insurers will ask you about past claims you've made. The cleaner your record, the lower your costs will usually be.
- How many claims you want covered. Some policies let you make as many claims as you need to per year, while others may cap the number of claims or dollar amount you can make. The more you are protected, the higher the cost of the insurance.
Do I need product liability insurance?
If your business manufactures, imports, or sells products of any kind, you should strongly consider product liability insurance. In Australia, consumer protection laws hold manufacturers and importers strictly liable for injuries or property damage caused by defective products.
Even if you only resell items made by other companies, you can still be held liable if the original manufacturer is overseas or untraceable, or if the product carries your brand name.
What does product liability cover?
Product liability insurance covers legal fees, defense costs, and settlements or court judgments awarded against your business. Common claims involve:
- Personal injury caused by a faulty product (e.g. burns from an overheating electronic device)
- Property damage caused by product malfunction (e.g. water damage from a ruptured plumbing valve)
- Illness caused by contaminated food or drink
- Inadequate safety warnings, incorrect labeling, or misleading instructions that lead to injury
Talk to a broker about product liability insurance
How does product liability differ from public liability?
While public liability protects you against accidents that happen on your business premises or while your employees are carrying out work (such as a customer slipping on a wet floor), product liability protects against harm caused by items after they have left your control and custody.
Product liability insurance is often covered under a public liability insurance policy or bundled together. You may find that they have different types of coverage limits. For example, your public liability policy may have an unlimited number of claims per year that it will cover you for, while your product liability is more likely to be capped at a certain dollar amount. If you think about it, public liability has to cover you for a lot more than just your products, so it makes sense that product liability cover is often slightly smaller.
PPL and policy bundling
In industry terms, these two covers are frequently referred to as PPL (Public and Product Liability). Most Australian insurers bundle them together because the risks often overlap. For example, a catering business needs public liability for the safety of its premises and product liability for the food it serves.
Comparison with Professional Indemnity
While PPL covers physical injury or property damage, Professional Indemnity (PI) is designed to protect against financial loss caused by a breach of professional duty or negligent advice. If you are a consultant who provides advice that leads to a client losing money, you need PI cover. If you sell a physical item that causes a fire, you need product liability.
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Hi, i am wanting to use my own personal ride on electric golf scooter, the golf courses are asking for public liability, i am having trouble finding insurance to cover this … can you help me
Regards Wayne
Hi Wayne,
Your path forward is depending on what type of vehicle it is, and what state you’re in. I’ll answer for NSW, but you’ll need to look up the details locally. If we’re talking about a proper golf buggy, the 2-seater kind, then you’ll probably need to apply for Conditional Registration. This is a watered down version of the CTP and rego that you get on your car – CTP is included in the cost of conditional rego in NSW.
If the vehicle is more like a mobility scooter, then you might need a separate public liability policy – these are normally only issued to small businesses, which makes it a bit tricky. Best bet is to find a small business insurance broker that can help you, or call a public liability insurance company directly to talk through your needs.
Hope this helps, and enjoy the links!
Hi, I make my own nail polishes and beauty products, do you have any recommendation for product liability insurance? I already have public liability insurance. TIA
Hi Pari,
I hope you are doing fine today. Thanks for your question.
As we are a comparison website, I cannot recommend or suggest a specific option for you, as your decision would entirely depend on your needs.
On the page you are viewing, you may fill out the form for you to receive a quote for product liability insurance.
I hope this helps.
Cheers,
Judith
If we want to be a distributor for a certain camera brand from China. Apart from product liability what other insurance do we need? I would like a quote please. Thank you
Hi Renae,
Thank you for your inquiry.
As we are a comparison website, I’m afraid we may not be able to recommend specific insurance to you as the best option would depend entirely on your situation by taking into account the type of your business, your cover needs, and the insurance you can afford. Nevertheless, there are types of business insurance that you’d want to check. If you’d like to get a personalised business insurance quote, best to fill out the form from that same page and click on the green “Enquire Now” button.
Please ensure you review the relevant PDS and T&C before purchasing a cover.
Cheers,
May
Hello. I am wanting to start a small home based business making baby wash, lotions etc. that a naturally based. I have developed the product and now am looking at the next steps. It will be an online business with myself doing everything and not employing anyone. What type of insurance will I need to start with? and around about what will I need to pay?
Hi Fran,
Thank you for your enquiry. Considering you are manufacturing your own product to distribute to the public, it would definitely be worth considering taking out product liability cover to offer protection in the event that a claim is made against you. It is not possible to provide you with an estimate for what you will pay based on this information alone as many other factors will need to be considered. finder.com.au is not currently partnered with any business insurance providers but we can recommend the business insurance broker austbrokers.com.au/
Thanks again for your enquiry and apologies for not being able to provide more assistance at this stage.
Hi,
I am new in business and just started sourcing out for product liability insurance for my business. I am selling security products importing from China and resell it in Australia. However, all of the insurance companies I called advise that they do not offer product liability insurance to anyone that import Electronic products from overseas especially security products (cctv, camera gadgets etc) because I am considered as the manufacturer of the products if I’m importer. The insurance companies advise that we should go for insurance brokers to source for the product liability insurance. We have being sourcing for the past few months and it appears that anyone that sell imported security products from overseas will not be able to cover the business in terms of product liability. Do finder.com.au know of any insurance companies that offer this type of product liability insurance.
Your help is much appreciated.
Al
Hi Alan,
Thank you for your enquiry. Unfortunately, most insurers will exclude cover for products that are imported from overseas. Finder does not currently feature any Business Insurance providers that will provide cover for this type of product distribution. You may wish to make an enquiry with the Australian General Insurance Broker Group Austbrokers.com.au
We apologise for not being able to provide further assistance with your enquiry at this stage.
Thanks again for your enquiry and all the best.