Product Liability Insurance for a baby product

[Babyproducts]

I am preparing to launch our baby product, which has undergone the comprehensive EN71 testing, which it passed and therefore ensures our product is compliant with the EU and UK toy safety standards and confirm they are safe to use.

I want to ensure I fully understand my personal liability and responsibilities in the event of any issues or incidents related to this product (despite the extensive safety testing mentioned above), as it is proving hard to secure Product Liability Insurance as I can’t get my manufacturer to agree to full rights of recourse (they are based in China).

Specifically, I am looking to understand:

• The extent of my personal liability if I proceed to sell the product without Product Liability Insurance
• How I ensure my activities fall under the work of the Limited Company, and not me as an individual

I would appreciate advice on the above, TIA!

 

[fisicx]

You could get huge fines, lose the company, even go to jail. To launch without product liability insurance is very unwise.

 

[Babyproducts]

You could get huge fines, lose the company, even go to jail. To launch without product liability insurance is very unwise.

Thank you for the prompt reply. My business is structured as a limited company which I understand should protect me personally from huge fines / jail (especially as I have completed rigorous safety testing) although I understand the company would be at risk. I’m just trying to understand if I can’t get product liability insurance whether this is game over, or whether there are other options etc.

 

[Babyproducts]

You could get huge fines, lose the company, even go to jail. To launch without product liability insurance is very unwise.

Thanks for your quick response though

 

[Frank the Insurance guy]

I am preparing to launch our baby product, which has undergone the comprehensive EN71 testing, which it passed and therefore ensures our product is compliant with the EU and UK toy safety standards and confirm they are safe to use.

Well done on getting the EN71 testing. I assume the product is manufactured and imported from China? If so a couple of things to consider:
1. Was the testing carried out by an independent third party testing company, or by the manufacturer?
2. You will need to consider ongoing batch testing (preferably in the UK) to ensure future products continue to meet EN71 compliance

I can’t get my manufacturer to agree to full rights of recourse

I haven't heard of any manufacture that has agreed to put this in writing within the contract. Your best option is to ensure that the contract does not exclude, reduce or waive your rights of recourse - as long as this is the case, my understanding is that "by default" you have rights of recourse against the manufacturer.

Specifically, I am looking to understand:

• The extent of my personal liability if I proceed to sell the product without Product Liability Insurance
• How I ensure my activities fall under the work of the Limited Company, and not me as an individual

All depends on the circumstances at the time - action can be taken personally if the claimant can prove that you have wilfully and knowingly allowed something to happen, or have not taken actions that a company director would be expected to take.
If you can demonstrate that you have run the company in a proper manner, then it is unlikely that a claim against you personally would be successful - however this won't stop someone trying it on, which may end up costing you in legal fees to defend yourself!
If a Health & Safety issue arises, action may be taken against a company director - particularly if a product does not meet the compliance standards required!


Unfortunately, Products Liability Insurance for baby/childrens products made in China is difficult to source and where it is available, premiums will be high!

 

[Babyproducts]

Well done on getting the EN71 testing. I assume the product is manufactured and imported from China? If so a couple of things to consider:
1. Was the testing carried out by an independent third party testing company, or by the manufacturer?
2. You will need to consider ongoing batch testing (preferably in the UK) to ensure future products continue to meet EN71 compliance


I haven't heard of any manufacture that has agreed to put this in writing within the contract. Your best option is to ensure that the contract does not exclude, reduce or waive your rights of recourse - as long as this is the case, my understanding is that "by default" you have rights of recourse against the manufacturer.

All depends on the circumstances at the time - action can be taken personally if the claimant can prove that you have wilfully and knowingly allowed something to happen, or have not taken actions that a company director would be expected to take.
If you can demonstrate that you have run the company in a proper manner, then it is unlikely that a claim against you personally would be successful - however this won't stop someone trying it on, which may end up costing you in legal fees to defend yourself!
If a Health & Safety issue arises, action may be taken against a company director - particularly if a product does not meet the compliance standards required!


Unfortunately, Products Liability Insurance for baby/childrens products made in China is difficult to source and where it is available, premiums will be high!

Thanks so much for your response, it is incredibly helpful and appreciated!

Yes, the product is manufactured to my specification and imported from China. The product safety certification was conducted by a 3rd party UK provider, and I will have each subsequent batch tested.

I don’t have a contract per se, I found my manufacturer via Alibaba and undertake all our communications and payments via the platform. I haven’t signed an actual contract with them, therefore why I am unsure how to go about understanding my position with regards to the rights or recourse. Would an insurance company be satisfied with the assumption, that by default if it is not stated anywhere, that I have not “excluded, reduced or waived my rights of recourse”?

I have a quote for both Product and Public Liability insurance, and as you expected the premium is high. My concern with the quote is that it states in the paperwork the below:

“Rights of Recourse Condition
It is a condition precedent to Our liability that You maintain full rights of recourse against any manufacturer or supplier with whom You have entered Into a legal contract for the provision of Products as defined in this insurance.”

Do I need to document with my manufacturer my rights of recourse? Or is it enough that I have not given them up?

Thanks so much again for you help!

 

[fisicx]

Do you have an agent in China? Do not trust Alibaba. Just because the initial batch passed the necessary test doesn’t mean subsequent deliveries will be OK. This is why they don’t want to give you full rights of recourse. They don’t want liability.

 

[Frank the Insurance guy]

“Rights of Recourse Condition
It is a condition precedent to Our liability that You maintain full rights of recourse against any manufacturer or supplier with whom You have entered Into a legal contract for the provision of Products as defined in this insurance.”

Do I need to document with my manufacturer my rights of recourse? Or is it enough that I have not given them up?

The key wording is "...You maintain full rights of recourse..." - as long as your contract does not remove or waive the rights of recourse, you will be fine with the above insurance policy condition.

You say that you don't have a contract? I would check everything - does Alibaba not have any terms of sale etc?

For those interested, RPC Legal issued some legal guidelines on subrogation (ie. rights of insurance to may a recover/recourse against manufacturers) for Asia Pacific region: https://www.rpclegal.com/-/media/rp...e/rpc-subrogated-recoveries-brochure-2022.pdf

 

[Paul Kelly ICHYB]

rights of recourse

Good luck with that, with a Chinese supplier, especially via Alibaba!

 

[fisicx]

@Babyproducts - you are dealing with a sourcing agent not the manufacturer or even the supplier. They will do and say anything to get the contract but you cannot ever trust them to deliver what’s on the contract. You need a proper sourcing agent who will do all the necessary checks before the goods are put in the container.

As our resident expert @MOIC said: do not trust the Chinese.

 

[Babyproducts]

The key wording is "...You maintain full rights of recourse..." - as long as your contract does not remove or waive the rights of recourse, you will be fine with the above insurance policy condition.

You say that you don't have a contract? I would check everything - does Alibaba not have any terms of sale etc?

Ok great, thanks for advising. I have investigated and determined that I do actually have a contract as part of the order, which does not remove my right, so all good on this. Thanks again for all your help on this matter, it is appreciated!

 

[MOIC]

As our resident expert @MOIC said: do not trust the Chinese.

Caveat to above quote…..

Don’t trust or rely on what a Chinese supplier tells you, especially on Alibaba!

I can hear the Triads already!