A Contractors Guide To Understanding Product Liability Insurance

The wonderful world of contracting means you can operate in a variety of different industries. The creativity and opportunities are endless when it comes to the types of industries you may work as a contractor in. So when it comes to creating and producing your own products, you want to put your best foot forward and ensure you have the right measures in place to protect your contractor business for the long term. 

As a small business owner, you’re probably no stranger to the different kinds of business insurances available and how can they safeguard your business. Let’s take a look at Product Liability insurance* and what it is designed to protect contracting business’ from. 

What is Product Liability insurance? 

Product Liability insurance is often sold as part of a Public Liability insurance* policy. It’s important to check your policy to see what you are exactly covered for, and the details of your Product Liability insurance policy.  

Product Liability insurance protects your business against claims by third parties relating to property 

damage or personal injury (not covered by the Accident Compensation Commission (ACC)) caused by 

your products. 

When might a contractor require Product Liability insurance? 

Product Liability insurance is something worth considering for businesses that supply or distributes products in New Zealand.  Even with the highest attention to safety, there is the possibility for something to go wrong.    

Claims arising from personal injury or property damage as a result of a product defect can cost your business a lot of money, and without the appropriate Product Liability insurance you could find yourself in a spot of bother. If you operate as a sole trader, you will potentially be exposed to personal liability for personal injury or property damage claims, meaning a Product Liability claim could seriously affect your personal assets. 

Examples of Product Liability claims 

A Product Liability claim could arise from:  

  • A fault in the manufacturing or production of a product 

For example, the plastic casing of a power adapter is not put together tightly enough, electrical wires become exposed, causing electric shock.  

  • A defect in the design of the product 

For example, clothing manufactured using dye that contains a hazardous chemical causing illness.  

  • Defective warnings, instructions or labelling of the product 

For example, a specialist work machine is sold without adequate instructions for use, or a warning about the dangers if used incorrectly.    

What is Public Liability insurance? 

With Product Liability insurance often being part of a Public Liability insurance policy, we thought we would share some of the basics of what this kind of insurance provides protection for. 

Public Liability insurance is designed to provide protection for you and your business in the event a customer, supplier or a member of the public are injured (and not covered by the Accident Compensation Commission (ACC) ) or sustain property damage as a result of your negligent business activities. 

Building your contractor business doesn’t need to be stressful and neither does getting your Product Liability or Public Liability insurance sorted. 

BizCover offers business insurance solutions to help different kinds of contractor businesses get their insurance sorted without shopping around and messing about with boring paperwork.  

Visit bizcover.co.nz and get insurance for your sole trader business without drama so you can get on with your day. If you’d prefer to pick up the phone and chat you can find us at 0800 249 268. 

*This information is general only and does not take into account your objectives, financial situation or needs. It should not be relied upon as advice. As with any insurance, cover will be subject to the terms, conditions and exclusions contained in the policy wording. © 2023 BizCover Limited. 

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