How much does product liability insurance cost?

Calculating your product liability cover

The cost of product liability will depend on the level of cover you choose. Identifying the risks your business faces will help you to decide the best level of cover to protect you from potential claims against your business in relation to the products you make, supply or distribute.

Short-term, cheaper cover might seem like a good financial decision but it’s important to make sure you have sufficient cover in the long-term for claims that could arise. This guide takes you through the questions to ask yourself that will help you decide the level of cover you need.

Product liability insurance with Superscript starts at £29.95 per month for £2m of cover.

How much does product liability insurance cost?

To help you decide on the level of cover you need, and therefore how much your premium will be, it can help to start by identifying each risk your business faces. Once you understand this, you can assess the likelihood of this risk and then calculate how much each risk would cost you in legal and compensation fees. To do this, you can ask yourself four questions:


What risks does your business face?

When it comes to product liability insurance, the types of risks that you can buy cover for relate to claims in which a third party suffers injury or property damage as a result of the products you make, supply or distribute. So, some risk examples could be:

  • A beauty product creates an allergic reaction in a client
  • Some fresh packaged food that's sold to a customer causes salmonella
  • A faulty TV with a loose wire gives a customer an electric shock
  • A heater that your company builds malfunctions and causes a fire in a customer's house

How likely is this to happen to my business?

The next stage is to think about the probability that each risk could affect your business. Has this risk occurred already? How many times? If not, do you think it could happen? And if so, how often?

Answering these questions will help you determine the probability.


How much would this risk cost my business in lost revenue?

If there have been instances of incidents already, tally up the total that it cost you for each risk in customer compensation and legal fees.

If no incidents have occurred yet, it's worth doing some research to see how much a potential risk could cost you in legal and compensation fees. Often, this is in the thousands, if not millions. If you don't have insurance, you would be personal liable for these costs and would have to pay them out of your own pocket.


How much would cover for this risk cost?

After calculating how much a potential claim could cost, compare this to the price of insurance. The price of insurance will likely be far less than a claim would cost, even with the addition of an excess.

This will help you decide if buying product liability insurance is worth it.

Superscript's product liability insurance starts from £29.95 per month.

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Our insurance 101 guides answer more of your product liability questions.