Product Liability Insurance in Australia: What It Covers and Who Needs It

Product liability insurance may help cover claims where a product your business sells, supplies, manufactures, or imports causes injury to a person or damage to their property. In Australia, product liability is typically bundled with public liability in one policy, called Public & Products Liability Insurance.

If your business puts any physical product into a customer's hands, whether you made it, sourced it, or just resold it, product liability may be relevant. It is often arranged together with public liability, rather than as a standalone policy.

At a Glance

• Product liability may help cover third-party injury or property damage caused by products you sell, supply, manufacture, or import.
• In Australia, it is usually bundled with public liability as Public & Products Liability.
• Under Australian Consumer Law, businesses such as importers, suppliers, and sellers can have responsibilities for product safety, and importers may be treated as manufacturers in some circumstances.
• Common claims include allergic reactions, food contamination, defective goods, and missing safety warnings.
• It does not usually cover product recall costs, the product itself, or professional advice errors.
• upcover arranges Public & Products Liability Insurance for eligible Australian businesses.

You may need to check product liability cover if you: sell online, import products, white-label goods, sell food or cosmetics, make handmade products, supply parts, sell at markets or events, or distribute products under your brand.

What Is Product Liability Insurance?

Product liability insurance may help cover claims where a product your business provided causes bodily injury to a third party or damage to their property. The cover responds after the product has left your hands, when the customer takes it home and something goes wrong.

This covers products you manufacture, products you import, products you wholesale or distribute, and products you sell or supply as part of a service. If your business had any role in putting the product into the customer's hands, product liability may be relevant.

Cover may include third-party bodily injury, third-party property damage, legal defence costs, and compensation payable, subject to the policy wording, limits, and exclusions.

How Does Product Liability Differ from Public Liability?

These two covers protect against different risks, but they are often arranged together in Australia.

Product liability example: You sell homemade candles at a weekend market. A customer takes one home, lights it, and it overheats. The candle damages their dining table and scorches the wall. The customer claims repair costs. Product liability may respond to claims arising from products you sold.

Public liability example: At the same market, a customer trips over your extension lead while browsing your stall and fractures their wrist. They claim medical costs and lost wages. Public liability may respond to claims arising from your business activities.

The difference: public liability is about what your business activities cause. Product liability is about what your products cause after they leave your hands.

Why Are Product Liability and Public Liability Sold Together?

Most businesses that sell products also interact with the public. A retailer needs public liability for slip-and-fall risks in the shop, and product liability for what happens after the customer takes the purchase home. A market stallholder needs public liability for the stall setup and product liability for the goods they sell.

Rather than requiring two separate policies for two risks that almost always coexist, Australian insurers bundle them into one: Public & Products Liability. This can mean one policy, one premium, and one Certificate of Currency, depending on the insurer and policy structure. The cover limit may apply across both.

This also means when you get a quote for Public & Products Liability through upcover, both covers are typically included, subject to occupation, product type, and insurer. But always check the policy schedule to confirm your products are declared and covered.

Is Product Liability Included in Your Public Liability Policy?

In most Australian policies, yes. Where upcover arranges Public & Products Liability Insurance, products liability is typically included, subject to occupation, product type, insurer appetite, and policy wording. But before relying on it, check three things:

Are your products declared? Your declared business activities and product types matter. If you add a new product line, tell your broker or insurer so they can confirm whether it is covered.

Are any product types excluded? Some policies exclude high-risk products such as food supplements, ingestible goods, products for children, or products with electrical components. Check the policy wording.

Is the cover limit shared? Some policies may apply one shared limit across both public liability and products liability. Check your policy schedule and wording.

What if I only need product liability? In the Australian small business market, most insurers bundle product liability with public liability rather than offering it separately. Standalone product liability policies may be available through specialist brokers, particularly for manufacturers or importers with significant product exposure. Through upcover, product liability is arranged as part of Public & Products Liability. If you believe your business needs product liability but not public liability, speak with a broker about your specific situation.

Who Needs Product Liability Insurance?

• You sell physical products. Retailers, e-commerce stores, market stallholders, and anyone selling physical goods to customers.
• You make or assemble products. Manufacturers, food producers, cosmetics makers, candle makers, soap makers, supplement producers, and anyone who creates a product from raw materials.
• You import products for resale. Under Australian Consumer Law section 7, if you import a product and the overseas manufacturer has no place of business in Australia, you may be treated as the manufacturer. Separately, if a consumer asks you to identify the manufacturer and you cannot do so within 30 days, you may become directly liable to that consumer under ACL section 147.E-commerce sellers sourcing from overseas platforms should pay particular attention.
• You supply products as part of a service. Mechanics supplying parts, therapists using oils, beauty professionals using skincare products on clients, builders installing components or fittings.

Product Liability and Australian Consumer Law

Product liability insurance does not replace your responsibilities under Australian Consumer Law. Businesses that sell, supply, import, manufacture, or distribute products may have product safety and consumer guarantee obligations. The ACCC says businesses must sell safe products, comply with safety standards, and take action if a safety issue occurs. Retailers, suppliers, wholesalers, distributors, importers, and manufacturers can all have responsibilities.

If a product is unsafe, customers may be entitled to a refund, replacement, or compensation. Insurance may help with some third-party injury or property damage claims, but it does not remove your obligation to sell safe products or respond to safety issues.

Common Product Liability Claims

Illustrative scenarios only. Coverage depends on the specific facts, policy wording, terms, and exclusions.

What Product Liability Does Not Cover

• Product recall costs are usually excluded unless recall cover is specifically included. If you need to pull a defective batch from shelves, that is typically a separate product recall policy.
• The defective product itself is not covered. Product liability covers third-party injury and property damage, not the cost of replacing or refunding the product.
• Professional advice errors are not product liability claims. If a client alleges your advice caused them a financial loss, that falls under professional indemnity insurance.
• Known defects before the policy starts may be excluded. If you knew the product was defective and sold it anyway, the insurer may decline the claim.
• Intentional misconduct is usually excluded. Knowingly selling a dangerous product is not an insurable risk.
• Your own stock or inventory is not usually a product liability claim. Business pack, property, or goods-in-transit cover may be relevant, depending on what cover you arrange and the policy wording.

How Much Does Product Liability Insurance Cost?

Because product liability is usually bundled with public liability, the premium is part of your Public & Products Liability quote rather than a separate standalone cost.

As an indication, Public & Products Liability for a small business may start from around $30 to $60 per month for lower-risk operations, while businesses selling higher-risk products (food, cosmetics, supplements, children's goods) or importing goods may pay $80 to $150 per month or more. These are indicative examples only and are not quotes. Actual premiums vary by occupation, product type, turnover, cover limit, claims history, insurer, and policy terms.

For broader cost information, see public liability insurance cost in Australia.

What to Check Before Buying Product Liability Cover

Before arranging cover, work through these questions:

• Are all your product types declared to the insurer?
• Do you import, manufacture, white-label, or only resell?
• Are high-risk products (food, cosmetics, supplements, electrical, children's goods) excluded or subject to special conditions?
• Is product recall excluded?
• Are exports or US/Canada sales excluded?
• Is the cover limit shared with public liability?
• Are your product warnings and labels adequate?
• Do you keep supplier agreements and batch records?

How upcover Can Help

upcover arranges Public & Products Liability Insurance for eligible Australian businesses with selected insurers and underwriters. Depending on your occupation, products, and insurer, you may be able to quote online and access a Certificate of Currency showing your cover.

• 70,000+ businesses covered across Australia.
• 4.9/5 customer rating.
• Instant Certificate of Currency on policy confirmation.

For more on what public liability covers, see what is public liability insurance. For cost information, see public liability insurance cost in Australia. For sole trader cover, see public liability insurance for sole traders.

upcover Pty Ltd ABN 17 628 197 437 is a Corporate Authorised Representative (CAR 1299211) of Experience Insurance Services Pty Ltd ABN 41 657 596 506, AFSL 539078.

FAQ

What is product liability insurance?

Product liability insurance may help cover claims where a product your business sells, supplies, manufactures, or imports causes third-party injury or property damage. It responds after the product has left your business and caused harm.

Is product liability the same as public liability?

No. Public liability covers injury or damage from your business activities (someone trips in your shop). Product liability covers injury or damage from your products (something you sold causes harm at the customer's home). In Australia, both are usually bundled together as Public & Products Liability.

Is product liability included in public liability insurance?

Often, yes. Many Australian insurers bundle product liability with public liability as Public & Products Liability. Check your policy schedule and wording to confirm products liability is included and your products are declared.

Do e-commerce businesses need product liability?

If you sell physical products online, product liability may be relevant. This includes products you source, import, white-label, or resell. Under Australian Consumer Law, sellers and importers can be liable even if they did not manufacture the product.

Am I liable if I import a product from overseas?

Under Australian Consumer Law, businesses such as importers, suppliers, and sellers can have responsibilities for product safety. If the overseas manufacturer cannot be identified or has no Australian presence, the importer may be treated as the manufacturer in some circumstances.

Does product liability cover product recalls?

Product recall costs are usually excluded unless recall cover is specifically included in the policy. Product liability covers third-party injury and property damage from your products, not the cost of retrieving and replacing defective stock.

How much does product liability insurance cost?

Cost depends on product type, turnover, supply chain, claims history, and cover limit. Because product liability is usually bundled with public liability, the cost is part of your Public & Products Liability premium. As an indication, some small businesses may find cover starts from around $30 to $60 per month, while higher-risk product businesses may pay $80 to $150 per month or more. These are indicative only and not quotes.

Can I get product liability without public liability?

In the Australian small business market, most insurers bundle product liability with public liability as Public & Products Liability Insurance rather than offering product liability separately. Standalone product liability policies may be available through specialist brokers, particularly for manufacturers or importers with significant product exposure but limited public-facing operations. Through upcover, product liability is arranged as part of Public & Products Liability. If you believe your business needs product liability but not public liability, speak with a broker about your options.

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_{Written by upcover's editorial team. Reviewed for insurance content accuracy. The information in this article is general in nature and provided for informational purposes only. It does not constitute personal insurance, legal, or financial advice. It does not take into account your objectives, financial situation, or needs. Product liability insurance is typically bundled with public liability as Public & Products Liability Insurance. Cover depends on policy wording, limits, and exclusions. References to Australian Consumer Law are general in nature and do not constitute legal advice. Before purchasing or relying on an insurance product, consider the relevant PDS, Target Market Determination, policy wording, and Financial Services Guide. upcover Pty Ltd ABN 17 628 197 437 is a Corporate Authorised Representative (CAR 1299211) of Experience Insurance Services Pty Ltd ABN 41 657 596 506, AFSL 539078. upcover arranges insurance products with selected insurers and underwriters and does not compare all general insurers or insurance products available in the market.}