Product liability insurance is taken for items that are sold or given away. A product must be “fit for purpose” and a seller is also legally liable and / or responsible for any damages caused by the products that he has supplied.
Responsibilities of the Seller:
If a faulty product is supplied, the purchaser will initially come and claim from the purchaser even though he is not the manufacturer. The seller is liable for compensation claims if:
The manufacturer has stopped the manufacturing of the product
Some manufacturer has made the product but it has the name of the business of the seller embossed on it
The product has been imported from any country outside the European Union
The manufacturer cannot be clearly identified
The business of the seller repairs or renovates the product.
Other than these above circumstances, it is the manufacturer who is liable if the product is made of parts that have been made by different manufacturers.
Products under Coverage:
Damage to property or personal injury caused by the product falls under the coverage of PLI. If any incident occurs on or after 29th January 2007, personal injury compensation can be awarded to him along with the ambulance charges and the hospitalization charges. PLI will never cover an economic loss caused by a faulty product, which has been manufactured by the seller, serviced and also sold by him. PLI also takes care of faulty products that have not been taken care of by the quality control team. There are certain details that the insurer wants to know:
Whether the machineries used are appropriate, up to date and well maintained
The manufacturing staff are properly trained
The manufacturing is done according to the best in the industry
Amount of the Cover:
In most of the cases, a business has a cover between £1 million to £5 million in order to have a minimum premium. This also takes care of the risk of compensation and helps a company to maintain its goodwill.
