Insurables — Australian business risk, sourced and dated
Cover type

Products liability insurance: what it covers and who carries it

Cover for legal liability arising from goods a business sells, supplies or installs, usually written alongside public liability.

Cover normally bought as part of this policy rather than separately: Product recall insurance.

Data as at · refreshed by scripts/seed-graph.mjs

In short

  • Products liability responds when goods a business sold, supplied, installed or repaired cause injury or damage after they leave its control.
  • It is usually written on the same policy as public liability, which is why many businesses do not realise they hold it.
  • It follows the product, so it can respond long after the sale.

Products liability is the half of a liability policy that keeps working after the job is finished and the invoice is paid. If something a business supplied or installed later injures somebody or damages property, this is the cover that answers.

It matters most to businesses that do not think of themselves as manufacturers: an installer fitting somebody else’s equipment, a retailer selling imported goods, a cafe serving food.

Also called: products liability, public and products liability

How liability follows a product down the chain

Australian consumer law lets an injured person pursue parties along the supply chain, and an importer can find itself standing in the shoes of an overseas manufacturer that cannot practically be sued here.

That is why a business that only resells or installs can carry a real exposure. It did not make the thing, but it put it into somebody’s hands.

  • A manufacturer whose product fails in service
  • An importer treated as the manufacturer for goods brought in from overseas
  • A retailer or wholesaler who supplied the goods
  • An installer whose installation is part of what failed

What it does not pay for

The policy pays for the injury or damage the product caused, not for the product. Replacing the failed item, refunding it, or recalling a batch are commercial costs, and the last of those has its own class of cover.

This is the distinction that surprises people: a faulty component that burns down a building is a large claim for the building, and no claim at all for the component.

What people get wrong about it

The commonest error is assuming a business that does not manufacture has no product exposure. Installing, repairing, importing and reselling all put a business in the chain.

The second is expecting the policy to fund a recall. Withdrawing a product from the market is a separate cover, bought deliberately, and it is not part of a standard liability section.

The third is assuming cover ends when the business does. Because liability follows the product, claims can arrive after a business has stopped trading, which is why the run-off conversation matters when a business is sold or wound up.

Questions

I only install products somebody else makes. Do I have a product exposure?
Potentially yes. If the installation forms part of what failed, or if the business supplied the item as part of the job, it sits in the supply chain. This is one of the more common reasons an installer is asked for products liability alongside public liability.
Does products liability pay to replace the faulty product?
Generally no. The cover responds to the injury or property damage the product caused. The cost of the product itself, and of replacing or recalling it, sits elsewhere.

Clauses that turn up in this cover

  • Aggregate limit — The maximum an insurer will pay for all claims in a period of insurance, as distinct from a per-claim limit.

Occupations that commonly carry it

Ordered by how central this cover is to each occupation in the graph. A pattern in the data, not a statement that any business is required to hold it.

  • Manufacturers — Making and finishing goods for sale, where the product carries liability past the gate.
  • Solar installers — Design and installation of photovoltaic and battery systems, an accredited electrical specialisation.
  • Electricians — Licensed electrical work, from domestic fit-outs to commercial and industrial installation.
  • Caterers — Preparation and service of food off-site, at venues and private homes.
  • Food truck operators — Mobile food service, trading across council areas and at events.
  • Plumbers — Licensed plumbing, drainage and gas-fitting work across domestic and commercial sites.
  • Cabinet makers — Manufacture and installation of joinery, cabinetry and built-in furniture.
  • Fire protection technicians — Installation, testing and certification of fire detection and suppression systems.
  • Retailers — Shopfront sale of goods, with stock, customers and a lease to manage.
  • Online retailers — Sale of goods online, carrying product and data exposures without a shopfront.
  • Market stallholders — Trading from temporary stalls at markets and events, usually under organiser conditions.
  • Wholesalers and distributors — Supply of goods to other businesses, carrying products liability down the chain.
  • HVAC technicians — Installation and servicing of heating, ventilation, air conditioning and refrigeration plant.
  • Glaziers — Supply and installation of glass in windows, doors, shopfronts and balustrades.
  • Lift technicians — Installation and maintenance of lifts, escalators and access equipment.
  • Cafe operators — Coffee and light food service with customers on the premises.
  • Restaurant operators — Full food service, usually with a liquor licence and commercial kitchen.
  • Bakers — Production and retail of baked goods, with allergen and labelling obligations.
  • Butchers — Preparation and retail sale of meat, licensed for food handling.
  • Bar and pub operators — Licensed venues serving alcohol, with responsible service obligations.
  • Breweries and distilleries — Production of alcohol for sale, with excise and licensing obligations.
  • Accommodation providers — Motels, holiday letting and short-stay operation with guests on site.
  • Pest control technicians — Licensed application of pesticides and termite management for domestic and commercial property.
  • Waterproofers — Membrane and tanking work to wet areas, balconies, roofs and below-ground structures.
  • Stonemasons — Cutting, dressing and installing natural and engineered stone, including benchtops and cladding.
  • Beauty therapists — Facial, waxing, lash and body treatments performed on clients.
  • Mechanics — Servicing and repair of vehicles in a workshop, in customers’ custody.
  • Mobile mechanics — Vehicle servicing performed at the customer’s home or workplace.
  • Auto electricians — Diagnosis and repair of vehicle electrical and electronic systems.
  • Panel beaters — Collision repair and refinishing, working on vehicles owned by others.
  • Tyre fitters — Supply and fitting of tyres in workshop and mobile settings.
  • Car detailers — Cleaning and paint correction of vehicles, mobile and in premises.
  • Welders — Structural and fabrication welding, including hot work on site.
  • Swimming pool builders — Construction of in-ground and above-ground pools, including barriers and certification.
  • Signwriters — Design, fabrication and installation of signage, often at height or on shopfronts.
  • Equipment hire operators — Dry and wet hire of tools, plant and access equipment to trades and the public.
  • Naturopaths — Natural therapies and nutritional advice outside the registered health professions.
  • Nail technicians — Manicure, pedicure and enhancement services, often in shared premises.
  • Cosmetic injectors — Injectable cosmetic treatment delivered under clinical supervision.
  • Irrigation contractors — Design and installation of irrigation systems for farms and grounds.
  • Hairdressers — Cutting, colouring and treatment services in salon and mobile settings.
  • Spray contractors — Licensed application of agricultural chemicals, by ground rig and aerially.
  • Tattooists — Licensed tattoo and body-art work, regulated for skin penetration in every state.
  • Carpet cleaners — Steam and dry cleaning of carpets and upholstery in homes and commercial premises.
  • Dog groomers — Grooming and washing of animals in salons and mobile vans.

How it is evidenced

Sources