Product liability and product recall insurance
Produced in partnership with Sam Tacey of Cooley (UK) LLP and Richard Hopley of Cooley (UK) LLP
Product liability and product recall insurance

The following Insurance & Reinsurance practice note produced in partnership with Sam Tacey of Cooley (UK) LLP and Richard Hopley of Cooley (UK) LLP provides comprehensive and up to date legal information covering:

  • Product liability and product recall insurance
  • What is product liability insurance?
  • Product liability cover—scope of cover
  • Insuring clause
  • Meaning of ‘product’
  • What constitutes ‘damage’
  • Legal liability
  • Trigger of cover and notification
  • Product liability insurance—common exclusions
  • Efficacy insurance
  • More...

What is product liability insurance?

Product liability insurance provides an indemnity to a business in respect of legal liability to the end-users of the products which it either manufactures or sells. Broadly speaking, this liability arises under the tort of negligence, the strict liability regime imposed by the Consumer Protection Act 1987 or under contract (either expressly or pursuant to a term implied by the Consumer Rights Act 2015). The essence of the cover provided is for liability arising out of personal injury or physical damage to property. Product liability cover does not usually extend to covering damage to the defective product itself.

Product liability insurance is not compulsory and there is not a single ‘standard form’ product liability policy, but a number of off-the-shelf products, often combined with public liability and/or general liability, are available. For larger insureds with higher risk profiles, or where an insured manufactures or sells unusual products, bespoke policy forms, drafted by the major brokers and insurers, are also available.

Product liability cover—scope of cover

Insuring clause

Although there is no single standard insuring clause in product liability insurance policies, there are a number of common features and requirements which define the scope of cover:

  1. an indemnity is provided against all sums which the insured is legally liable to pay by way of damages

  2. where those damages arise in respect of accidental personal injury

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