What is product liability insurance?
Product liability insurance can cover the costs you become legally liable for in compensation for claims arising from the products you manufacture, sell or supply. Product liability insurance with AUZi can pay for losses or damage as a result of claims made involving your products. Product liability insurance generally forms part of a public liability policy.
Understanding the definition of a product is essential in recognising the risks you could be liable for. These products can include items you import, manufacture, retail, or simply alter and sell.
Who needs product liability insurance?
Anyone who manufactures, imports, alters, or simply retails a product requires product liability insurance. The list of occupations that are exposed to product liability claims is extensive. Below is a brief list of occupations exposed to product liability claims, see the full list here.
- Cake & Biscuit Makers
- Caterers
- Clothing Manufacturers
- Dance or Zumba Instructors
- Florists
- Make Up Artists
- Manufacturing of Wooden Models
- Natural Therapists
- Soap & Candle Makers
- Party Hirer's
- Market Stall Holders
- Car Detailers
- Cosmetic Manufacturer
- Interior Designers
- IT Consultants
- Photographers
Why do I need product liability insurance?
As a seller, supplier, manufacturer or importer of items, you have a product liability exposure. Product liability insurance is not compulsory. However, when providing goods to consumers it is a valuable investment. Once a product has ceased to be in your physical possession or control, you are liable for that product.
Your insurance policy wording will have specific definitions as to what a product can be. Bear in mind that if you simply import the product, you are likely still deemed the manufacturer for insurance purposes. This also applies if you only relabel, repackage, alter in any way, service or even advertise as if it is your product. Please ensure you read your policy wording to understand the definition of a product.
Products that you sell, supply or manufacture have requirements you must adhere to under the Australian Consumer Law, which is administered by the Australian Competition and Consumer Commission. Your products must comply and meet Australian Standards.
Before purchasing an insurance policy for your small business, take the time to understand what a product is for insurance purposes, and if the cover is right for you.
Product liability insurance claim examples
Scenario 1 – Candle maker
A customer buys a candle from your market stall. They take the candle home and light it. The candle explodes and causes damage to the customer’s carpet and furniture.
Scenario 2 – Food
A customer buys food from your business and takes it home. The customer and their family then suffer food poisoning.
Scenario 3 – Earthmover
As an earthmover you excavate a trench. After your workers all go home for the day, a third party trips and falls into the trench.
Scenario 4 – Clothing
You purchase clothing from Kmart and add your own labels and decals to the items. A customer purchases this item and it causes a reaction or damage to them.
Scenario 5 – Electrical items
You import electrical items from overseas to sell. The items are faulty and catch fire, causing damage to a customer’s home.
Frequently Asked Questions
Yes. UNLESS you have specifically chosen a public liability only policy for a market stall holder.
Yes, and at anytime throughout the year as long as your products don’t fall under our hazardous or excluded lists. We have tailored policies for some of the excluded items such as bath and body products which are better covered under our niche policies.
Yes. Importing items to then resell can deem you the manufacturer for insurance purposes.
The incident that the claim has risen from must have taken place during the period of your policy.
However, please read more about this here.
Immediately after completing your purchase, you will be emailed an invoice and schedule of insurance that includes a policy wording and your certificate of currency.