Difference Between Public and Product Liability Insurance

Public Liability Insurance vs Product Liability Insurance

Public and product liability insurance is essential for businesses and individuals to protect them against unforeseen accidents, injuries, or property damage. These types of insurance offer financial security by covering legal claims and potential losses that may arise from third-party incidents. ...read more

Public and Products Liability Insurance Definition

Public liability insurance focuses on incidents linked to business activities, including employee actions. For example: If a customer trips on a loose wire in your store and breaks their arm, public liability insurance would cover legal fees and compensation.

In contrast, product liability covers claims about the products you manufacture, sell, or supply. For example: If a faulty hairdryer sold by your business causes a fire or injury, product liability insurance would cover legal costs and compensation.

Both public and product liability insurance policies protect you from the financial consequences of legal actions and compensation claims. However, they apply in different scenarios.

What Does Public Liability Insurance Cover?

Legal Fees: Covers the cost of defending your business in court, if sued.
Medical Costs: Helps pay for medical expenses if someone is injured on your premises
Damage to Rented Premises: Covers damage to rented business premises caused by third parties
Property: Covers damage to property that your business is responsible for
Treated Effluent Discharge: Covers claims arising from the discharge of treated effluents.
Transportation Liability: Covers liability related to the transportation of goods or products.
Pollution Claims: Provides coverage for pollution claims resulting from sudden accidents on your premises.

What Does Product Liability Insurance Cover?

Protects Profit and Loss: Shields your business from financial losses due to product liability lawsuits
Worldwide Coverage: Offers global coverage with customisable territory and jurisdiction options
Product Recall Costs: Covers expenses related to product recalls, including redistribution costs
Product Guarantee: Covers costs incurred during product recall exercises
Third-party Loss Protection: Helps protect clients from additional costs like extra wages or production delays due to recalls
Crisis Management: Covers PR expenses to restore your brand's reputation after a valid claim
Food and Beverage Claims: May provide coverage for claims related to food or beverages served by your business

Product Liability Insurance vs Public Liability Insurance

Here is the detailed difference between public and product liability insurance to help you compare and choose the suitable one for you and your business —

Feature	Public Liability Insurance	Products Liability Insurance
Claims	Claims arising from bodily injury or property damage caused during the delivery of your services	Claims arise from bodily injury or property damage caused by a defective or unsafe product
Suitable For	Any business, especially those that visit client sites, handle equipment or provide manual labour	Businesses that manufacture, sell, or supply goods or products
Who is covered?	Third parties (clients, customers, contractors, public) injured or whose property is damaged during business operations	Third parties (customers, users) injured or whose property is damaged due to a defective product sold or supplied by your business
When is it most needed?	When your business interacts with the public or works in client environments, where accidents can occur	When your business produces, sells, or distributes products, especially if they could cause harm after reaching the consumer
Requirement	Not legally required but often required in client contracts or as a condition for work	Not legally required but necessary for businesses selling or manufacturing products to manage risks
How does it work?	Claims occur when the injury or damage takes place during the insurance period	Claims occur when injury or damage happens due to a product defect during the insurance period, regardless of when the product was sold
Risk exposure	Covers risks related to physical interactions with the public and environmental hazards	Covers risks tied to product design, manufacturing flaws, safety issues, or incorrect product usage warnings

What Factors Determine the Premium for Public and Products Liability Insurance?

The premium for both public liability and product liability insurance is determined by several factors, including —

Nature of the Business: Riskier industries or businesses with more public interaction may have higher premiums
Type of Products/Services: Manufacturing or selling high-risk products (e.g., electrical goods, food, chemicals) could increase premiums
Business Size: Larger businesses with more employees or greater public exposure might face higher premiums
Coverage Limits: Higher coverage limits will generally result in higher premiums
Claims History: A history of frequent claims can lead to higher insurance costs
Location of Business: Some areas may have higher premiums based on local regulations or the nature of the environment
Safety Measures: Implementing risk mitigation measures, such as safety training or quality control procedures can lower premiums

Frequently Asked Questions

Public liability is mandatory in the UAE for most businesses, helping them financially cover their operations. However, product liability is not mandatory.

With that said, it’s advisable to get both insurance types to keep your business covered against various risks.

The amount of coverage you need depends on the business risk and type, legal and compensation costs, industry requirements, and client contracts.

Yes, you can purchase public liability and product liability insurance together. This can be more cost-effective and easier to manage than having separate policies for each. A combined policy ensures that you are covered under one plan.