What are the Benefits of Product Liability Insurance

Product Liability Insurance Cost, Coverage & Providers

You never know when one of your products can cause harm to your client or their property. Although you might be unaware of the defects in your product, not all customers are forgiving. They can file a court case against you on the grounds of injury or damage caused by your “defective” products. 

A faulty electrical device can cause a fire breakout. Malfunctioning software can lead to a client making ill informed decisions, which may result in financial losses for them. A meal you supply in your café may lead to claims of food poisoning. 

No matter how rigorous your quality control procedures are, defects in your products can remain unknown which can be harmful to the users.  Moreover, customers and the general public may use your products in ways unintended by you, and you may be liable if harm is caused. 

That’s why they say that product liability insurance can be as important as having a good product. 

Product liability insurance can cover the cost defending yourself against claims, legal costs and ultimately damages, if someone becomes ill, is injured or their property is damaged by your product.  

Otherwise, the cost to defend your case can ruin your finances, let alone the final verdict that might order you to pay compensation.  

Therefore, having product liability insurance can provide peace of mind against such incidents.

Here are some key benefits of product liability insurance. 

Safeguarding Your Business: 

The key benefit of product liability insurance is that it can cover your business against the claims of personal injury and property damage caused by a product sold or supplied through your business. This way, it can protect your business by ensuring that if this occurs, you are less likely to pay any legal or compensation costs out of your pocket. 

Whether you are a manufacturer, distributor, or retailer, having product liability insurance cover is highly recommended for your business. Even with products that appear entirely safe, there is always a risk—as your product may be used in ways you never intended, and accidents can be unpredictable. Claims for personal injury and property damage occurring from product failure can be overwhelmingly expensive, and even if you are ultimately proved innocent, you might still have to pay heavy legal costs in your defence. 

Keeping Your Business Up and Running:

Legal costs to defend your business against product liability lawsuit can be enormously expensive. Small businesses might not survive the financial hardship of defending a product liability claim, leading to their failure. If you have product liability insurance in place, you have peace of mind that you may not need to pay legal costs out of your pocket. Generally, product liability insurance covers your legal fees as well as compensation. 

Helping You Build Your Business:

There are many suppliers and clients in Australia which require that the businesses they engage with be insured with product liability insurance. These organisation’s may require proof of your insurance before trading with you. Having product liability insurance helps you look credible and can open the door to new trading opportunities. 

Bottom Line:

So, these are some key benefits of product liability insurance cover for your business. Not all products that reach your customers may work as intended or are used as intended by you. We live in a litigious society where a minor fault or defect in a product can lead to big court cases. No matter if you are guilty or not, you may face financial hardship in defending yourself and paying for your legal case. 

That’s why product liability insurance is an important business insurance to cover your all legal costs occurring from the claims of damages for losses due to your product. 


*Important: Cover may be available subject to meeting insurers underwriting criteria. Some of the covers listed may or may not be available or may have limitations or exclusions. Cover inclusions vary significantly from insurer to insurer. DO NOT rely upon the above. Check your policy schedule carefully for inclusions and exclusions and limitations. Talk to a business insurance broker for more information.

Author Bio:

Romit Malhotra is the brand representative of Smart Business Insurance, a leading Australian insurance broker. A big foodie, he loves to travel the world. Also, a diligent businessman, Romit likes to pen down his thoughts on related topics whenever he finds some free time.