Products Liability Insurance

Products Liability Insurance provides comprehensive protection across three critical areas that protect your business from product-related incidents.

Personal Injury Coverage protects your business when products cause harm to customers or third parties. This includes injuries from design defects, manufacturing faults, inadequate safety warnings, or errors in product instructions. Your policy covers legal defence costs and compensation payments to injured parties, ensuring a single product defect doesn't threaten your business's financial stability.

Property Damage Coverage responds when your products damage someone else's property. Whether it's a faulty component that damages equipment, a defective product that causes fire damage, or any other property harm arising from your products, this coverage handles repair costs, replacement expenses, and associated legal claims.

Legal Defence Coverage is automatically included, protecting you from the mounting costs of defending your business against product liability claims. Even if a claim proves groundless, legal costs can quickly escalate into tens of thousands of dollars. Your policy covers solicitor fees, court costs, expert witness fees, and settlement negotiations, allowing you to defend your business without depleting your resources.

Products liability insurance premiums are calculated based on several key factors specific to your business and product risks:

• Size of company - Larger businesses with higher revenue and sales volumes typically face higher premiums due to greater exposure to potential claims
• Types of products - High-risk products like electrical goods, children's toys, or medical devices cost more to insure than lower-risk items like clothing or stationery
• Industry sector - Some industries face higher claim frequencies and severities, affecting premium calculations
• Claims history - A clean claims record may qualify for discounts, while previous product liability claims will increase premiums
• Manufacturing location - Products manufactured overseas, particularly from jurisdictions with less stringent quality controls, may attract higher premiums
• Sales channels - Businesses selling direct to consumers may have different risk profiles than wholesale distributors

Product liability insurance in New Zealand typically costs between $30 to $60 per month and is usually included as part of a combined public and products liability policy, providing comprehensive protection at an affordable price point.

What Is Products Liability Insurance?

Products Liability Insurance is a specialist form of business insurance that protects your company from financial loss when a product you supply, manufacture, sell, or import causes injury to a person or damage to someone else's property. It covers your legal defence costs, compensation payments, and settlement expenses — giving you the financial backing to defend your business and satisfy legitimate claims without putting your operation at risk.

In New Zealand, products liability cover is most commonly purchased as part of a combined Public and Products Liability policy, making it both practical and cost-effective for businesses of all sizes. Whether you're a small manufacturer, a retail business, an importer, or a wholesaler, if a physical product passes through your hands and reaches an end user, you carry some degree of product liability exposure.

Who Needs Products Liability Insurance?

Any business involved in the supply chain of a physical product should consider products liability insurance. This includes:

• Manufacturers and producers — businesses that design or make products, including food and beverage producers, engineering firms, and consumer goods manufacturers
• Importers — if you bring goods into New Zealand from overseas and a product causes harm, you may be treated as the manufacturer under NZ law
• Wholesalers and distributors — businesses that move products through the supply chain carry liability exposure even if they don't manufacture the goods
• Retailers — selling products to the public creates exposure if those products turn out to be defective or cause harm
• Repairers and servicers — businesses that repair or service products and return them to use can be liable if a repair contributes to a subsequent injury or damage event
• Trade contractors — builders, plumbers, electricians, and other tradespeople who supply and install products as part of their work

If your business falls into any of these categories — or a combination of them — products liability insurance is an important part of your risk management strategy.

What Does Products Liability Insurance Cover?

A well-structured products liability policy will respond to claims arising from three primary areas of exposure:

• Personal injury caused by your products — covering legal defence costs and compensation payments when a product you've supplied causes bodily harm to a customer or third party, whether through a design defect, manufacturing fault, inadequate safety warning, or incorrect product instructions
• Property damage caused by your products — covering repair or replacement costs and associated legal claims when a defective product damages someone else's property, such as a faulty component that damages machinery or a product that causes fire or water damage to a customer's premises
• Legal defence costs — covering solicitor fees, court costs, expert witness fees, and settlement negotiations, regardless of whether the claim against you is ultimately successful

Most policies also extend to cover costs associated with product recalls in certain circumstances, though this is typically subject to specific policy conditions. Your Gerrards broker can help you understand the scope of your cover and identify any gaps that need to be addressed.

What Is Not Covered by Products Liability Insurance?

Like all insurance policies, products liability cover has exclusions you should be aware of. Common exclusions include:

• Damage to your own products — the policy covers damage caused by your product to third-party property, not the cost of replacing or repairing your own defective goods
• Contractual liability assumed beyond standard legal liability — liability accepted under contract that goes beyond what you'd face under general law may not be covered without specific endorsement
• Intentional acts — deliberate misconduct or intentional damage is not covered
• Known defects — if you were aware of a product defect before a claim arose and failed to act, cover may be denied
• Product recall costs — unless specifically endorsed, the direct costs of recalling products from market are typically excluded from standard policies
• Pollution or environmental damage — products that cause pollution-related harm are often excluded from standard cover and may require specific environmental liability endorsements

It's important to read your policy wording carefully and discuss any specific risks with your Gerrards broker to ensure your coverage is appropriate for your business operations.

How Much Does Products Liability Insurance Cost in New Zealand?

For most small to medium-sized New Zealand businesses, products liability insurance is surprisingly affordable. When bundled as part of a combined public and products liability policy, premiums typically start from as little as $30 to $60 per month — a modest investment compared to the potentially ruinous cost of an uninsured claim.

The exact premium for your business will depend on a range of factors, including:

• The nature of your products — high-risk products such as electrical goods, children's toys, medical devices, or food and beverages attract higher premiums than lower-risk items
• Your annual revenue and sales volume — businesses with larger turnover have greater exposure and typically pay higher premiums
• Your industry sector — some industries carry higher claim frequencies and severity levels, which is reflected in pricing
• Where your products are manufactured — imported goods, particularly from regions with less stringent quality controls, may attract higher premiums
• Your claims history — a clean claims record can work in your favour at renewal, while a history of product claims will increase your premium
• Your risk management practices — businesses with strong quality assurance processes, proper labelling, and documented safety procedures are generally viewed more favourably by insurers

Because products liability is so frequently bundled with public liability, many businesses already have some level of products cover in place without fully realising it. However, the limits and scope of that cover may not be adequate for your specific risk profile. Gerrards can review your existing policies and advise whether your current cover is sufficient.

Products Liability vs Public Liability Insurance

These two covers are closely related and are often confused. Understanding the difference is important for ensuring your business is properly protected.

Public Liability Insurance covers your legal liability for bodily injury or property damage caused to third parties in the course of your business operations — for example, a customer slipping on a wet floor in your shop, or a contractor accidentally damaging a client's property while on site.

Products Liability Insurance specifically covers your legal liability for injury or damage caused by a physical product after it has left your hands — for example, a product you sold that later injures a consumer at home, or a component you supplied that fails and damages a client's equipment.

In practice, many NZ insurers package these two covers together into a combined public and products liability policy, providing seamless protection for both operational and product-related risks. This combined approach is generally the most practical and cost-effective solution for most businesses.

Legal Context in New Zealand

New Zealand's legal framework creates meaningful products liability exposure for businesses operating in the supply chain. The Consumer Guarantees Act 1993 and the Fair Trading Act 1986 both impose obligations on suppliers and manufacturers regarding the safety and fitness for purpose of products. Under the Consumer Guarantees Act, products must be of acceptable quality, fit for their intended purpose, and safe to use. Failure to meet these standards can expose your business to claims for repair, replacement, or compensation.

While New Zealand's ACC scheme covers the medical costs of personal injuries caused by accidents — including product-related injuries — it does not cover property damage, economic loss, or legal costs. This means that even in an ACC context, your business can still face significant legal exposure for property damage and consequential loss claims arising from defective products.

Additionally, as global supply chains become more complex, New Zealand importers need to be aware that when a foreign manufacturer cannot be sued in New Zealand, the importer is often treated as the manufacturer for liability purposes. This significantly elevates the importance of products liability cover for any business importing goods from offshore.

Products Liability Insurance for Specific Industries

While products liability is relevant across virtually all industries that deal in physical goods, some sectors face particularly acute exposure:

• Food and beverage — contamination, allergic reactions, and foodborne illness claims are a real risk for producers, processors, and suppliers in the food industry
• Manufacturing and engineering — component failures, design defects, and product performance issues can result in significant property damage and injury claims
• Retail and e-commerce — retailers, including online sellers, carry liability exposure for products they stock and sell, even when manufactured by third parties
• Medical and health products — businesses supplying health-related products face elevated liability exposure due to the direct impact on consumer health and wellbeing
• Children's products — toys, clothing, furniture, and other products designed for or used by children are subject to strict safety standards and high claim severity if a child is injured
• Electrical and electronic goods — the risk of fire, electric shock, or equipment damage from faulty electrical products creates significant liability exposure
• Agriculture and rural — fertilisers, chemicals, machinery parts, and agricultural equipment all carry products liability exposure in the rural sector

Regardless of your industry, Gerrards has the expertise to identify your specific product risk profile and match you with the right insurer and policy terms.

Why Use Gerrards for Products Liability Insurance?

As an independent New Zealand insurance brokerage, Gerrards works for you — not the insurance companies. That means we compare products liability policies from more than 20 trusted A-rated insurers to find the coverage that genuinely fits your business, at a price that makes sense.

Our brokers take the time to understand your business, your products, and your specific risk exposures before recommending a policy. We don't just find you the cheapest price — we make sure the policy you're buying will actually respond when you need it to. And when a claim does arise, we're in your corner to help you navigate the process and get the best possible outcome.

We can also provide same-day proof of insurance for businesses that need documentation quickly for contracts, tenders, or supplier agreements — a common requirement in today's commercial environment.

Get a Products Liability Insurance Quote Today

Getting covered is straightforward. Share your business details with us, and our team will compare policies from our panel of top NZ insurers and come back to you with tailored options and transparent pricing. Most businesses can be covered the same day, with proof of insurance issued immediately upon policy activation.

Don't leave your business exposed to the financial consequences of a product-related claim. Contact Gerrards today and let us help you find the right products liability coverage for your business.