What is Product Liability Insurance?
Product Liability insurance is designed for businesses who are involved in the production, supply and sale of products to members of the public. It helps protect against claims of personal injury or property damage that a third party suffers (or claims to have suffered) as a result of your business’s product.
In real terms, this means that if someone suffers an injury, or their property is damaged due to an actual or perceived fault in a product you have sold them, they may take legal action against you or your business to recover their loss. Product Liability insurance is designed to help protect your business, and depending on the policy you take out, may cover incidents that occur at your business premises, as well as incidents at other locations.
Product Liability insurance only covers claims made by external parties, not those made by your own employees. If you sell or supply products to customers, it is important to protect your business against claims that could arise from these products. That’s why Product Liability insurance is typically included as part of the Public Liability policies we arrange.
Who needs Product Liability Insurance?
Product Liability insurance is recommended for any business that is involved in the production, supply and sale of products. No matter what type of product that is, there’s always the potential for something to go wrong.
Claims of personal injury or property damage can be incredibly expensive. Even if you’re not at fault, you may still incur considerable legal costs while defending a claim.
Product Liability insurance can help safeguard your business by providing cover against such claims, including legal defence costs. So you can confidently go about your work, knowing your business has a level of protection if something goes wrong.
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What is typically covered and not covered?
| Covered | Not covered |
|---|---|
| Legal Liability: Damages you're legally responsible to pay a third party for the personal injury or property damage caused by your negligent business activities. This can also include their legal fees.1 | Claims of injury made by you or your own employees |
| Defence costs: Your legal costs incurred in responding to the claim, even if a court decides you're not liable to the third party.1 | Damage made by you or your employees to your own/ business property |
| A cyber-attack experienced by your business | |
| Allegations of defamation brought against you |
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Allied Health
Including Acupuncturist, Audiologists, Beauty Therapist, Counsellor, Health consultants and more.
Chiropractors & Osteopaths
Occupational Therapist
Professionals
Including Design Professionals, Consultants, Accountants and more.
Psychologist
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Including Personal Trainer, Physiotherapists and Podiatrists.
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Including Real Estate Agents.
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Music, Dance, Performers
Photography, Film, Entertainment
Community & Not-for-Profit
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Frequently Asked Questions
Is Product Liability Insurance mandatory?
Product Liability Insurance may be a necessary requirement before licences for certain trades are issued. It is one of the most important insurance products needed by businesses. In our opinion, if your business involves the sale or supply of products, then Product Liability insurance is a type of cover to consider having.
What is the difference between Public Liability and Product Liability?
Public Liability insurance covers your legal liability caused directly by your business activities or on your business premises during the course of your work. Product Liability insurance covers loss or damage caused by products your business sells.
For example, if you operate a catering business, and food you serve makes someone sick, you could be held liable to pay damages and the cost of their treatment. If you are a professional providing a service, Product Liability may not be applicable to you. Instead, if a client alleged your service or advice caused them financial loss or injury, you would need professional indemnity insurance to help cover this.
What is the difference between Professional Indemnity insurance and Product Liability insurance?
Professional indemnity insurance is designed for professionals who provide advice or services, and helps protect your business in the event a third party alleges that such advice or services caused them financial loss. Product liability on the other hand, is designed for businesses involved in selling, supplying or producing products, and helps protect your business in the event a third party alleges that your products caused them personal injury or property damage.
Do I need Product Liability insurance if I am self-employed?
The answer to this will depend on whether or not your business is involved in the production, supply or sale or products or physical goods. If your business function does involve this, then Product Liability should be a cover to consider.
Does Product Liability insurance cover employees?
If an employee suffers an injury while working for your business, Product Liability insurance will not provide any coverage for this. If your business employs staff or contractors, you can take out Workers’ Compensation to cover them.
Is Product Liability Insurance tax-deductible?
According to the Australian Taxation Office, you may be able to claim the cost of any premiums you pay for insurance against the loss of your income. You should always speak to your accountant to check your eligibility to claim expenses.
I’ve taken out Business Insurance, do I need Public Liability Insurance as well?
Public liability insurance can be taken out as a standalone policy, or as part of a business insurance policy. If you’ve selected public liability when taking out your business insurance policy, then you don’t need to take out another public liability policy separately.
What does Product Liability insurance not cover?
As with all types of insurance, there are certain common exclusions which apply under Product liability insurance. You should thoroughly read your Policy Wording and speak to your broker to understand them. Examples of standard exclusions may include claims relating to:
- Punitive damages which a court decides to be paid on top of compensation
- Damage to property you own or that is in your care, custody or control
- A cyber attack experienced by your business
- Allegations of defamation brought against you
- Liability arising out of asbestos or materials containing asbestos
I’m a tradie, can I arrange Product Liability Insurance through Aon?
If you’re a builder, tradie or subcontractor, Aon can arrange Product Liability insurance as part of our joint venture with Housing Institute of Australia – click here to visit the HIAIS website.
As a professional, what other types of insurance might I need?
Depending on your profession, and the nature of the work you carry out, there are several different policies you may need to consider.
For example, if you have an office and have clients visit you, you can take out a [Business Insurance pack](https://www.aondirect.com.au/insurance/business-insurance-pack ""Business Insurance pack"") to help cover the cost to repair your premises if your office is damaged by fire, storm or other event, as well as [Public and Products Liability](https://www.aondirect.com.au/insurance/public-liability ""Public Liability"") to help cover you if someone is injured on your property or by your products. Cyber Insurance also offers important protection, which can help protect your business against cyber threats and other internet-based risks.
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1Subject to the full terms, conditions, exclusions and limits of the policy.