Product liability insurance offers your business financial protection in the event that you are found legally liable for the design, manufacture, distribution, sale, repair or installation of a product that causes injury or property damage to a third party.
It will usually cover the cost of the award for compensation, replacement or repair of any damaged property, legal fees as a result of defending the claim, and medical expenses incurred as a result of the injury or damage.
Typically, in Ireland, product liability insurance is offered with a quote for business insurance which is tailored to the individual needs of your business.
Although public liability insurance is not a legal requirement, accidents can and do happen and it is strongly recommended that you have this cover in place.
Even if you are not found to be responsible for the injury or property damage to the third party, you will still be faced with the legal costs of defending yourself against a claim.
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Who offers product liability insurance in Ireland?
When choosing a product liability insurer in Ireland, the following companies should be considered.
How much does product liability insurance cost?
Price of product liability insurance can vary significantly between providers depending on the nature of the product.
For a product that is expected to be distributed and sold in one market via one distribution channel – such as FMCG retail outlets – you can expect to pay from as low as 800 euro per year up to the thousands of euros per annum.
As the sales and distribution of your product changes or increases and thereby increases the potential risk your premium will adjust accordingly.
How to compare different product liability insurance policies?
Generally, product liability cover is offered as part of a wider business insurance package depending on the needs of your business.
The premium you pay for product liability insurance will depend on the size of your business and the levels of protection you require. The level of protection you require will be determined by both the size of your business and the levels of risk associated with your business.
Levels of Risk
The level of risk associated with your business depends on the type of product you make, supply, or repair as well as your position in the supply chain.
Examples of this would be designing a toy which was found to be a choke hazard, or a cafe producing food which was found to make customers unwell.
The product liability might arise from a design flaw in the product, defects in the manufacture of the product, or inaccurate labelling or warnings regarding the use of the product. If you repair, refurbish, or install a product you may be found responsible if a claim arises.
Usually there is a limit of indemnity on the policy, beyond which your insurance will not cover you.
Indemnity Limit
This indemnity limit may only be paid once per claim or once per insurance period, depending on your policy. The level of indemnity will affect your insurance premium.Product liability insurance does not offer protection against product recall. Product recall insurance is a separate type of insurance policy.
The level of the excess on your policy can vary. It may be tempting to take a policy with a high excess to lower your premium, however, be wary as you will typically have to pay this excess each time you need to make a claim.
Who should have product liability insurance?
Any business involved in the supply chain of a physical product will need product liability insurance. For example:
Product Liability Insurance for Manufacturers
Manufacturers need product liability insurance whether the product they make is sold to other companies or to the public. If a product that you manufacture or make is found to cause injury or property damage to another person, then you may be held liable.
If you are found to be liable, then there may be severe financial consequences such as the cost of any compensation awarded and the legal fees incurred. Even if you are found not to be at fault you will still face the cost of defending the claim. Product liability insurance will offer financial protection against these costs.
Product Liability for Wholesale or Distribution Businesses
Wholesale or distribution businesses will need product liability insurance. Even if you do not physically manufacture a product, all members of the supply chain may be held liable if a product causes injury or damage to a third party.
Your business is also responsible for storing and distributing the product in a safe manner so may face the financial consequences if a claim is made against you. Any contracts or partnerships you enter into may also require product liability cover be in place as a condition of the contract.
Product Liability for Designers
Designers may need product liability insurance as their design may be held responsible for causing injury or damage to the property of a third party.
A product may be found to be inherently risky by design, the use of the product may have consequences for the safety of the consumer, the instructions for the product may be found to be inaccurate resulting in injury or property damage.
In any of the above examples, the financial consequences of defending a claim against you and the cost of any compensation award may be devastating for your business.
Protection for Retailers
Retailers have an obligation to sell products ‘of merchantable quality’ and may be found liable if the products they sell cause injury or property damage to a third party. Product liability insurance offers financial protection for defending a claim against you, and any award of compensation made to the injured party.
Product Liability for Food and Beverage Businesses
Food and Beverage businesses will need product liability insurance where a product that they sell causes injury or property damage to a third party. Food and beverage businesses face unique risks due to strict levels of quality control required in storing, handling, and selling food and beverage products.
Product liability may also offer protection against injury caused by errors in food labelling, design, and manufacturing. This can have serious consequences for consumers eg. food allergies.
Product Liability for Tradespeople
Where you are found to be liable for an injury to or property damage to a third party due to supplying, fitting, installing, or repairing a faulty product then you will need the financial protection provided by product liability insurance.
All parties of the supply chain of a defective product may be held responsible for damage or injury to a customer.
Product Liability for Contractors
Contractors may need product liability if the product you supply or your work on any product results in injury or property damage to another person.
Potential employers, contracts, or partnerships may also require product liability insurance cover, as well as other insurance, to be in place as a condition of any contract.
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