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Products liability insurance

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Product liability insurance

Products Liability Insurance is designed to protect your business from the financial blow that may come from damages or injuries caused by the products you supply, manufacture or sell.

Why is product liability important?

New products are constantly being designed, manufactured, and sold. With this, there’s an ever-increasing need for protection against the inherent risks associated with product-related incidents.

Product-related incidents can arise from anywhere – defects in design, manufacturing faults, or even errors in the instructions provided with the product. They can lead to injury or property damage and inevitably, legal disputes. Products Liability Insurance provides a vital layer of protection against these risks, protecting your business from potentially crippling financial obligations that may arise from such incidents, including legal fees associated with defending against claims. Additionally, this insurance covers compensation payments to injured parties or for property damage.

It’s crucial to have products liability insurance if your business:

  • Designs or manufactures products
  • Sells products to the public
  • Imports goods from overseas
  • Offers repair or maintenance services

What does product liability insurance cover?

Personal Injury

This aspect of Products Liability Insurance is designed to cover legal liabilities resulting from injury or harm caused by your product. If a person were to suffer an injury due to a defect in your product, or a fault in its design, this insurance would cover the legal costs and any compensation payable to the injured party.

Property Damage

If your product causes damage to other people's property, your business could face a legal claim. Products Liability Insurance ensures that your business can cope with any expenses for property damage arising from your your negligence.

Legal Costs

In the event of a legal claim against your business due to a product-related incident, the costs of legal defense can mount quickly. Products Liability Insurance helps cover your legal liability, allowing you to defend your business & if necessary pay compensation without endangering its financial stability.

How much does products liability insurance cost in NZ?

Products liability premiums are calculated on several different factors including:

  • Size of company
  • Types of products 
  • Industry operating in
  • Claims history

Product liability insurance in NZ typically costs between $30 to $60 per month and is typically included as part of a public liability policy. 

Who needs products liability insurance?

Any business involved in the design, manufacturing, selling, or import of products should seriously consider Product Liability Insurance. It’s equally important for businesses that offer services involving products, such as repairs or maintenance.

While there is no statutory obligation to have Products Liability Insurance in New Zealand, it is highly recommended for businesses dealing with products. This insurance offers protection against potential legal claims, which could otherwise result in substantial financial losses.

A standard products liability policy can sometimes cover product recall. However, specific product recall or manufacturers liability insurance will likely be a better fit for your business if this is a major concern. It’s important to discuss your business’s specific needs with your insurance broker.

How do I get proof of products liability insurance?

You can usually get proof of insurance same day when you purchase business product liability insurance through Gerrards.

Acquiring product liability insurance from traditional insurance brokers may require a few weeks, a delay that could create problems for policyholders who need instant insurance proof of products liability insurance for a contract. 

To obtain insurance coverage promptly, contact us. We may require you to provide some fundamental details about your business, such as:

  • The name of your business

  • Types of products

  • Use of products 

  • Size of business  

  • Risk management strategies

What does product liability insurance not cover?

While product liability insurance provides broad coverage, it doesn’t cover everything. Products liability is typically combined with public liability to form a combined public and products liability or general liability cover. This is done to broaden the cover and protect against more of the risks posed. It doesn’t cover everything though and here are some of the common exclusions:

Intentional Wrongdoing

Product liability insurance does not cover intentional acts or misconduct. If damage or harm was caused intentionally, even by your employees, your insurance will not cover the claim.

Contractual Liabilities

Any liability you assume under a contract is not usually covered by product liability insurance. It’s crucial to review any contracts carefully to understand your obligations.

Professional Mistakes

If your business offers professional advice or services, these aren’t covered under product liability insurance. Professional Indemnity Insurance is designed to cover these risks.

Known Defects

If you are aware of a defect in your product and fail to take action, any claim or injury caused resulting from this defect is unlikely to be covered by your insurance.

Other common questions about products liability insurance NZ

You can reduce your risk by implementing robust quality control processes, providing clear and thorough user instructions and warnings, and regularly reviewing your product safety measures. Having a good risk management strategy in place can also help reduce your premiums.

Notify your insurer immediately. They will guide you through the process and will typically manage the claim on your behalf. It’s also essential to keep all relevant documentation and information related to the claim.

Coverage for second-hand goods can vary between insurers and policies. It’s important to discuss this with your insurance broker to ensure you’re appropriately covered.

This depends on your policy’s terms and conditions. “Run-off” cover might be necessary to protect against any claims that emerge after you’ve ceased trading. Consult with your insurance broker to understand your policy’s specifics.

Yes. Regardless of whether you sell products in a brick-and-mortar store or through an online platform, there is still a risk of product-related incidents. It is also essential to purchase this if you trade in foreign countries and foreign jurisdictions as you can be held liable for the damages caused in the countries. To know if you are covered in these countries, check the specific areas noted in the jurisdiction and territory noted in the policy wording.

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