Public & Product Liability Insurance:
Public Liability Insurance relates to a policy that pays compensation to a member of the public in the event of the policyholder being successfully sued for causing death, injury, or damage to property by failing to take reasonable care in his or her actions or those of any employees. A business whose work brings them into contact with the public must have a public-liability policy or insurance.
That is why if you own a business that is open to public like, garages, motor factors, fast fit services, even small businesses such as tyre repairs/ replacement etc., it is really essential to have a public liability insurance where, you are transferring the burden to a certain insurance company in case of death, injury or any untoward incident that might happen within your daily operations.
Industry and commerce are based on a range of processes and activities that have the potential to affect third parties (members of the public, visitors, trespassers, sub-contractors, etc. who may be physically injured or whose property may be damaged or both). Most organizations include public liability insurance in their insurance portfolio even though the conditions, exclusions, and warranties included within the standard policies can be a burden. All tendering applications must confirm their insurance cover as part of the selection process.
In the event of a claim, out-of-pocket costs for a legal defense or settlement can far exceed premium costs. In some cases, the costs of a claim could be enough to shut down a small business.
A business must consider all potential risk exposures when deciding whether public, product, employers liability insurance is needed, and, if so, how much coverage is appropriate and cost-effective. In many countries claims are dealt with under common law principles established through a long history of case law and, if litigated, are made by way of civil actions in the relevant jurisdiction.
In product liability insurance terms, a product is any physical item that is sold or given away. Products must be ‘fit for purpose’. You’re legally responsible for any damage or injury that a product you supply may cause.
If you supply a faulty product, claimants may try to claim from you first, even if you did not manufacture it. You will be liable for compensation claims if;
- Your business name is on the product.
- Your business had repaired, refurbished or changed /adapted it.
- You imported it from outside the European Union.
- You cannot clearly identify the manufacturer (Base or Multi -Stage).
- The original manufacturer has gone out of business (Base or Multi-Stage).
- Otherwise, the base manufacturer is liable – or the producer, where the product involves parts from multi- stage manufacturers.
However, you must also:
- Prove that the products were faulty when they were supplied to you.
- Prove that you gave consumers adequate safety/operating Instructions and warnings about misuse of the product.
- Prove that you included terms for return of faulty goods to the manufacturer or producer in any sales contract you gave to the consumer.
- Ensure/Prove that your supply contract with the manufacturer or producer have adequate coverage pertaining to product safety, quality control and a product return system.
- Maintain good quality control and record-keeping systems (history archive).
What is covered?
Product Liability Insurance covers you against damages awarded as a result of damage to property or personal injury caused by your product, including damages covering the costs of hospital treatment – including ambulance costs.
Product Liability Insurance may not cover you against financial losses to a business or person caused by a faulty product which you manufactured, serviced or supplied.
Product Liability Insurance also covers you against unforeseen circumstances, such as product faults your quality control system couldn’t trace. However, if you simply make an inferior product, you may be unable to make a claim, or even get insurance. Bad workmanship is not covered.
Before issuing a policy your insurer will want to know that you’re:
- Manufacturing or services are carried out in line with industry best practice.
- All staff members are adequately trained.
- Equipment and systems are appropriate, up to date and well maintained (Audited).
- Conformity of production (COP) procedures are firmly in place (2007/46 Directive).