Selling, manufacturing or distributing products in the UK involves a duty of care to consumers. If a product causes injury or damage, the party held responsible may be exposed to claims, investigations and legal costs. Without product liability insurance, these risks could directly impact a business’s finances and reputation.

We explore the potential legal and financial consequences of operating without product liability cover, and why many UK businesses choose to arrange protection against these exposures.

Who Might Need Product Liability Insurance?

Product liability cover may be considered by businesses that:

• Sell or supply physical goods to the public

• Import or distribute products under their own name

• Modify or repackage items for sale

• Manufacture goods for wholesale or retail use

This includes a broad range of sectors, such as electronics, food and drink, cosmetics, clothing, and household equipment. Even if a product is sourced from another supplier, liability may still rest with the party that made it available to customers.

What Could Go Wrong Without Product Liability Insurance?

Even with robust quality control, problems can occur. Without product liability insurance, a business may be responsible for the full cost of defending or settling a claim. Scenarios could include:

• Injury claims: A faulty electrical appliance causes burns to a user.
• Property damage: A leaking product damages flooring or furniture.
• Health risks: Contaminated food or skincare items lead to illness.
• Product recalls: Businesses are required to withdraw a defective batch.

These situations may result in claims for compensation, legal representation, product testing, or expert evidence. Without insurance, each of these costs could need to be paid out of pocket.

What Are the Legal Risks?

UK consumer law places responsibility on suppliers to ensure that products are safe. If a product is found to be defective, regulatory bodies such as Trading Standards or the Health and Safety Executive (HSE) could investigate.

Businesses may face:

• Civil claims brought by affected customers

• Product recall obligations

• Regulatory fines and sanctions

• Court proceedings and legal scrutiny

For businesses importing goods from outside the UK, the legal risk may be higher. If the original manufacturer is overseas or untraceable, the importer could be seen as the legally responsible party.

The Financial Impact of Going Uninsured

Claims involving personal injury or property damage can be substantial. Legal fees, compensation, expert reports and reputational management all carry costs. If a business cannot afford to defend a claim or pay compensation, it may risk insolvency.

A single incident involving a high-risk product could have long-term consequences for a small business, especially where trading relationships or contracts depend on proof of insurance.

Could Platforms or Retailers Require Cover?

Some online platforms and high-street retailers may request evidence of product liability insurance before agreeing to stock or promote a product. For example:

• Amazon may require sellers to carry insurance above a certain turnover.

• Retail chains might include liability clauses in their supplier agreements.

Without cover, a business could miss out on sales opportunities or be excluded from specific commercial channels.

Why Arrange Product Liability Insurance?

Although it may not be legally required in all cases, product liability insurance is often considered a valuable safeguard. It can:

• Help cover legal defence and settlement costs
• Offer protection against claims arising from faulty or harmful products
• Support ongoing operations during a claim process
• Demonstrate professionalism and responsibility to customers and partners

Brokers can assist in identifying suitable policies, including those tailored to specific industries or product types.