What Is Product Liability Insurance for Tradesmen?

What does product liability insurance actually pay for?

It pays third party injury and property damage claims caused by a defective product you supplied, along with the cost of defending them. It does not pay to replace or recall the product itself.

The claims it answers

A defective push-fit connector that floods a first floor flat is a product claim. So is a fabricated handrail that gives way, or a light fitting that overheats behind a plasterboard ceiling.

• Injury to a client, a family member or a passer-by caused by something you supplied.
• Damage to the building or its contents when the product fails after handover.
• Defence costs, expert reports and court fees, which often outrun the compensation.
• Claims made during the policy year for products you supplied in earlier years.

Why the product and not the workmanship

If the fitting was sound and your installation was wrong, that is a workmanship question and it belongs to the public liability side of the policy. If the fitting was faulty out of the box, it is a product claim.

In practice the insurer works out which one applies after the loss adjuster has been out. That is one reason what public liability insurance covers matters as much as the products limit itself.

When does the consumer protection act 1987 make you strictly liable?

When you are the producer of the product, put your own brand on it or import it. The Act removed the need to prove negligence, so an injured person only has to show the product was defective and that the defect caused the damage.

What strict liability changes in practice

Under ordinary negligence law, a claimant has to show you fell below a reasonable standard of care. Under the 1987 Act they do not have to show anything about your conduct at all.

A product is defective when its safety is not what people are generally entitled to expect. Poor instructions and missing warnings can make an otherwise sound product defective in law.

A supplier only steps into the producer’s shoes under section 2(3). That needs the claimant to request identification of the producer within a reasonable period and the supplier to fail to comply.

Installing someone else’s product does not make you strictly liable on its own. Keep the paperwork that names the manufacturer of everything you fit.

That is why a careful, well documented trade business still buys the cover. Doing everything right is a defence to negligence, not to strict liability.

Can you be liable for a manufacturer’s defect you only fitted?

Yes, and it happens more often than most tradesmen expect. Supplying goods you did not make still exposes you through your contract with the client and through the identification duty in the 1987 Act.

Three ways a fitter ends up in the frame

The first is contract. When you supply and fit, you sell goods, and goods you sell have to be of satisfactory quality even though somebody else built them.

The second is the identification duty. If the injured person cannot work out who produced the item, they can ask you to name your supplier.

The third is alteration. Cut, adapt, rebrand or rebuild a product and you can become its producer in law, which is a live risk for a carpenter making up units from bought-in components.

How does liability pass back through the supply chain?

It passes back when you can name the party above you. Identify your supplier or the importer within a reasonable time and the claim moves up the chain, which is why your paperwork decides who pays.

Why your purchase records are the defence

The Act lets a claimant treat a mere supplier as the producer when the real producer cannot be identified. Batch numbers, delivery notes and merchant invoices are what break that link.

Keep them by job, not by month. A claim that lands three years after a bathroom refit is useless to defend if you cannot say which merchant sold you the valve.

Where the chain stops at you

It stops with you when nobody above you can be found, when the goods were imported by you, or when your own name went on the product. Own-branding a bought-in item makes you the producer.

A builder importing tiles direct from outside the UK takes on producer liability for them, even though the kiln was somebody else’s.

What is the difference between product liability and public liability?

Public liability answers what your work does while you are doing it. Product liability answers what the thing you supplied does afterwards, often long after you have left site.

The boundary insurers actually draw

Public liability responds to injury and damage arising out of your activities. Product liability responds to injury and damage arising out of goods sold, supplied, repaired or installed by you.

Neither one covers financial loss caused by bad advice or a wrong specification. That belongs to professional indemnity, and the split is set out in professional indemnity compared with public liability.

Which trades carry the most product risk?

Anyone who supplies as well as fits. The exposure climbs with how safety-critical the item is and how much of it you assembled yourself.

Where the supply-and-fit model bites hardest

A gas engineer supplying and commissioning a boiler carries product risk on the appliance as well as workmanship risk on the pipework.

• Joiners and fabricators building bespoke units, gates, staircases and structural timber.
• Kitchen and bathroom fitters supplying appliances, worktops and sanitaryware.

Electricians supplying consumer units, protective devices and light fittings sit at the sharp end, because a failed component can start a fire rather than a leak.

• Metalworkers and fabricators making gates, railings and structural steelwork to order.
• Roofers supplying membranes, flashings and fixings alongside the labour.

Scheme membership does not remove the risk either. Gas Safe registration proves competence, not that the appliance you fitted was sound.

What is not covered by product liability insurance?

The product itself, the cost of getting it back, and anything you knew was wrong when you supplied it. The section pays for the harm the product does, not for the product.

The exclusions that catch trades out

• Replacing, repairing or recalling the defective item, including the labour to strip it out.
• Deliberate supply of goods you already knew were faulty or unsafe.
• Pure financial loss with no injury and no physical damage behind it.
• Products used in aviation, offshore or other excluded sectors named in the wording.

Sub-limits hidden inside a public liability policy

Because products cover usually rides inside public liability, it often carries its own inner limit. Some wordings also apply products cover in the aggregate for the year rather than per claim.

Tradesman Saver publishes £1 million as its standard product liability limit, with £2 million and £5 million options, legal expenses up to £250,000 and cover from £53 a year. Those are one broker’s figures rather than a market rate, so read your own schedule.

An aggregate products limit is the one that hurts. Two unrelated claims in the same year share a single pot, and the second claimant gets whatever the first one left behind.

How much product liability cover do you need?

Match it to the limit your contracts already demand, then check it is not quietly capped below that. Most trade policies run product liability at the same figure as public liability.

Reading the limit against your contracts

Domestic work generally runs on £1 million or £2 million, while local authorities, NHS trusts, schools and main contractors usually specify £5 million.

The ABI notes that public liability is not legally compulsory for tradesmen in the UK, so the number you carry is set by your contracts rather than by statute.

Before you buy, check the insurer on the FCA Register. It takes a minute and tells you who is actually carrying the risk.