Product Liability Insurance | Quotes and Requirements
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Product liability insurance protects you against liability claims due to the products your business sells. While it's not required by UK law, product liability insurance can protect you if you're sued, and may be a condition of contracts you have with suppliers, manufacturers, distributors or retailers. Here we explain what it is, what types of claims are covered and who needs to buy product liability insurance.
- What is product liability insurance?
- Do I need product liability insurance?
- What does product liability insurance cover?
- Common Exclusions
- FAQs
What is Product Liability Insurance?
Product Liability insurance protects against claims of bodily injury or property damage due to the use of your business's goods or products. Specifically, product liability insurance provides financial protection by covering legal fees as well as as compensation payments. Product liability insurance covers:
- Legal fees to defend claims of bodily injury or property damage due to a product you sold
- Compensation payments you're required to pay as a result of a claim
So, product liability insurance can protect your business financially from having to pay legal defence costs and compensation if you're sued by a customer—but what types of circumstances does this apply to? Here are some examples of situations that could be covered by a product liability policy:
Examples
- You buy hammers from China and resell them in the UK. The heads fly off the hammers when they're used, injuring customers and causing property damage.
- You make handmade ceramics. In your latest batch of mugs, the handles are prone to breaking off, leading to customers being injured by scalding.
- You bake and sell cupcakes at local fairs. It turns out there are trace amounts of peanuts in your nut-free cupcakes, sending a child with a peanut allergy to hospital with a life-threatening reaction.
- The tablecloths you sell in your gift shop turn out to be highly flammable, contributing to a house fire when a candle in someone's home is accidentally knocked over.
- A dog toy you make and sell online at etsy and ebay has toxic filling. Numerous pets fall seriously ill.
- Your company designs a child's riding toy. The toy breaks whilst being ridden by some children, causing injury.
Product liability insurance can protect you and your business from having to pay thousands or even millions in legal costs and compensation payments in these types of situations—where you make, distribute, retail or sell products in any way.
Do I Need Product Liability Insurance?
Product liability insurance remains a cornerstone of business protection, especially in 2026, as high inflation and the surging cost of raw materials have drastically increased the financial stakes of property damage claims. Furthermore, the rising cost of specialist medical care means that even a minor personal injury settlement can now reach tens of thousands of pounds. In this high-cost environment, being underinsured is a significant risk; a single large-scale claim could easily exceed a basic policy's limits and threaten the survival of your business.
Every business that sells a product along its path to a consumer is meant to ensure the safety of a product. In fact, the Consumer Protection Act 1987 Section 2(1) specifically states that "... where any damage is caused wholly or partly by a defect in a product, every person... shall be liable for damage."
Even if you're not ultimately liable for a product that causes bodily injury or property damage, you could be named in a lawsuit and face legal defence fees, which can quickly mount up.
What Types of Claims does Product Liability Insurance Cover?
There are a number of different types of injury or damage claims that product liability insurance can protect against. Here are a few examples:
1. Design Defect
With a design defect claim, it's argued that a product's design led to a product being dangerous. With these claims it's not the manufacturing process at fault or the craftsmanship of a product, but the original design that resulted in an unsafe product.
Example: a customer purchases a plastic toy for children that was designed with holes around the size of a child's finger. A child's finger becomes stuck in the toy, leading to a serious injury. In this case it was the inherent design of the toy that created the risky situation leading to bodily injury.
2. Manufacturing Defect
The most common type of product liability claim, a manufacturing defect flaw claim alleges that a product is unsafe due to the manufacturing or production process—in this case the design was safe but something happened during the making of a product to make it unsafe. Products with a manufacturing fault can lead to a dangerous situation resulting in bodily injury or property damage.
Example: For example, an electric hotplate has a faulty temperature control, causing some products to overheat to dangerous and unexpectedly-high temperatures. Numerous customers are burned as a result.
3. Warning or Labeling Failure
A warning failure claim alleges that a product did not come with sufficient instructions, labels or warnings regarding how to use the product safely. It could be that a product is only safe to use under certain conditions or by following certain instructions.
Example: A natural face cream that you sell does not include a warning in its instructions that the product makes your face more sensitive to sunlight.
Common Exclusions
Product liability insurance terms will vary depending on the insurer, but there are some common exclusions to know about. Also, keep in mind that product liability insurance covers third party claims only (e.g., claims brought by your customers, clients or others in the supply chain), not claims by your employees or a business owner.
- Claims brought by your employees
- Damage to your business
- Pollution
- Product recall and repair
- Bad workmanship
- Financial losses to a third party caused by your defective product
Product Liability Insurance Companies
Most business insurance providers in the UK will offer product liability insurance. It's one of the most common types of business cover and it frequently sold together with public liability insurance. Here is a list of some of the companies that sell product liability insurance in the UK:
- AXA (Direct policies available for most SMEs)
- Direct Line (Specializes in direct cover for small trades)
- Allianz (Available through direct digital portals)
- Hiscox (Focuses on higher-end professional and retail risks)
- Simply Business (Marketplace for comparing Zurich, Markel, and others)
- AIG / Chubb (Commonly accessed via brokers for mid-to-large businesses)
FAQs
In the UK, product liability cover is typically wrapped up with public liability insurance in the same "Public and Products Liability" insurance policy. But sometimes public liability insurance and product liability insurance are sold separately. Before you buy a policy, however, check to be sure.
Yes, product liability insurance also covers situations where you give away your product for free.
Yes, product liability insurance covers all aspects of the supply chain, starting with product design. When a product's design leads to a risky situation leading to bodily injury or property damage then product liability insurance can cover legal defence costs and compensation payments if you're sued.
Product liability limits in the UK typically range from £1 million to £10 million. However, in 2026, a £1 million limit is increasingly viewed as a bare minimum rather than adequate protection. Recent adjustments to the personal injury 'Ogden rate'—the calculation used to determine large compensation payouts—combined with high general inflation, mean that court awards for serious injuries have climbed significantly. Many industry experts now advise businesses to consider a baseline limit of at least £2 million or £5 million to ensure they aren't left exposed by a catastrophic incident. Talk to an advisor to discuss what might be best for your business.
No, product liability covers third party bodily injury or property damage claims related to the products you sell while professional indemnity insurance covers third party claims if your professional advice or service leads to a client's financial loss.
Any company making, supplying and/or selling products to customers should have product liability insurance, as they could face legal action if their goods cause bodily injury or property damage. Whether you're making your own goods to sell on Amazon or reselling goods manufactured or supplied by someone else, you are part of the supply chain and could be at risk without the right cover in place.
Every company in the supply chain should have product liability insurance. Even if you're not ultimately liable for a product that causes bodily injury or property damage, you could face legal action and need to pay legal defence fees.
Yes, all businesses in the supply chain are meant to ensure the safety of goods you supply. Therefore, distributors should have product liability insurance to protect against third party claims of bodily injury or property damage due to a product.
Yes, all businesses in the supply chain should have product liability insurance to protect against third party claims of bodily injury or property damage due to a product. The Consumer Protection Act requires that you ensure the goods you sell are safe. While insurance is not required by law, it may be required by your vendors.
Yes, builders should have product liability insurance because they supply/sell parts to their customers. If a product you supply causes bodily injury or property damage then you could face legal action—which product liability insurance can protect you from financially.
Yes, an electrician should have product liability insurance to protect against a product you supply causing injury to someone or damage to property. For instance, if a part you supply has an electrical defect and causes a fire, you could be sued for damages.
Yes, a craft business needs product liability insurance to protect against claims from your customers if they are injured or their property damaged by one of your products. For example, if you sell handmade potholders and a customer's hands are burned whilst removing a hot dish from the oven, causing him to drop the dish which shatters their tiled kitchen floor, you could be sued for bodily injury for the burn and/or be required to pay compensation to repair the broken tiles.
Yes, if you are selling products on marketplaces like Etsy, eBay, or Amazon, product liability insurance is essential to protect against claims of injury or damage. It is also important to note that as of 2026, HMRC has full visibility of your online trading activity. Under the 'side hustle tax' rules implemented in 2024, online platforms are now required by an international OECD mandate to automatically report your earnings and bank details to HMRC if you exceed the £1,000 annual trading allowance. This makes it more important than ever to ensure your business is not only insured but fully compliant with UK tax and registration requirements.