Public Liability Insurance vs Product Liability Insurance

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 —

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

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