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What is

Product Liability?

Product Liability is a legal concept. In a layman’s terms, “Product Liability hold a party or a group of parties liable for loss or damage to a Third party by its product(s)”.

Before we go into a more in-depth view, we must first understand some important concept. We must define what a “Product” is, who a “Third Party” is and who are the “Liable Parties”.

Product is “movable property manufactured or processed”. Product also includes the container, materials, parts or equipment furnished in connection with such goods or products. Product also includes Warranties and Warning Labels.

Third Party refers to any person or company who may in any way be injured by coming into contact with the product.

Liable Parties refer to anyone who: Manufactured, Sold, Handled, Distributed or Put their names on the Product. Which means all the Vendors, Trading Company, Importer, Exporter, Licenser, and Manufacturer can be sue for Product Liability.

Now you can begin to see why your clients are asking you to purchase Product Liability Insurance.

“Injury” must be provable and “Property Damage” must be of tangible property.

What is consider as a Defective Product?
A defective product refers to products that is “Not Reasonably Safe”, a product is deem to be defective for the following reason:

1) Design Defects: “The defect arises in the actual design or formulation of the product such that it is unsafe so as to not perform according to reasonable expectations of the consumer”.

2) Manufacturing Defects: “Arise due to human or machinery failure during the production phase.”

3) Failure to Warn: “Did not have adequate warning as to the foreseeable harm and foreseeable misuse.”

Nowadays, most countries have a developed legislation. European Community has their EC Directive, Japan has Product Liability Law, USA and United Kingdom had already had many reform on their Product Liability Law. Even China have at least two sets of laws concerning Product Liability. In most legal system, A person can become liable for their product based on the following three theories:

  • 1) Strict Liability

  • 2) Negligence

  • 3) Breach of Warranty


If you want to learn more about Product Liability and how you can be protected, contact us today!



Product Liability


Product Liability F.A.Q

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