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Product Liability Insurance Explained
Do you operate a business from home? If you do, then it’s important to know your home insurance doesn’t automatically cover product or public liability exposures.
What is product liability insurance?
Under the Australian Consumer Law (ACL), importers are considered the manufacturers, giving them an extra level of responsibility, mainly because it can be very difficult for customers to make a claim or sue an overseas company.
Examples of claims include, hazardous toys injuring children, phone recharges that cause house fires, salmonella in food or faulty airbags in cars, causing injuries to the customer that purchased the item or the person using it.
So, taking out product liability insurance as protection against potentially having to pay legal defence costs that can amount to tens or even hundreds of thousands of dollars, plus pay damages awarded by a court, is a great way to manage that financial risk for a fixed amount each year
Product safety issues that may affect your insurance cover
Product Liability claims regularly make heading lines, recent cases include, injuries caused by medical devices, IUD, pacemaker and implants; failure of Takata car airbags; salmonella in lettuce etc.
Another relevant example was the global shortage of alcohol-based hand sanitisers which resulted in the importation of methanol so that local businesses could manufacture this product in Australia. Subsequent product safety concerns led to a 2% standard being imposed on methanol. In addition, there’s the case against Amazon as a distributor of consumer products and whether they’re liable for the products sold on its site. This is particularly relevant given that many small businesses have moved into the e-commerce space since the pandemic.
Yet another example of current product safety issues is the regulation of face masks that are intended to protect against disease. Considered as medical devices, the TGA regulates face masks under the Therapeutic Goods Act 1989. This means that importers, suppliers and manufacturers of face masks have obligations under this Act.
All these examples demonstrate the importance of product liability insurance to businesses that supply, sell or manufacture goods sold to consumers and other businesses.
Guarantee of Acceptable Quality and Fit for Purpose
To discuss Product Liability and insurance needs, talk to your local insurance adviser.
All information above has been provided by the author.
Insurance Advisernet, ABN 15 003 886 687, AFSL 240549
This article originally appeared on Insurance Advisernet News and has been published here with permission.
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