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Background:

I'm an electronics engineer thats considering designing and selling guitar effects pedals in the UK only. This is only intended as a side hobby (unless it becomes financially viable). As part of my research into starting a (very) Small business I've been looking at liability insurance

Question:

How long is someone liable for their product. For example, if I design and sell a pedal, in 20 years time if someone gets electrocuted by it am I still liable? Given that in the time frame components will have degraded the product could have been re-sold etc. Or is the manufacturer only liable in the warranty period? (for UK minimum 12 months). This effectively leads to me asking, how long do I need liability insurance for? If I find that selling these pedals makes little money and decide to stop making them or close down the business , how long do I need to have liability cover for?

Sidenote:

Please provide sources for any answer as I'm keen to read around the topic

  • I believe that there is no fixed time limit on liability, but problems cause by normal wear or deterioration of parts should not cause liability. But I don't have a source, an don't know UK law so well, so I'm not posting this as an answer. Any company that sells insurance for such liability should know the rules for this. – David Siegel Jul 10 at 15:10
  • A few years ago, Apple was ordered in South Korea to replace some six year old iPods for free for being a fire risk, long past any warranty. But only iPods that were still in working conditions. So the argument seemed to be “as long as it works it must be safe”. – gnasher729 Jul 11 at 15:56
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This is not a direct answer to your question, because I think you have an X/Y problem (you are trying to find out out how to make your proposed solution to the underlying problem work - what you really need is a better solution to the problem).

What you need is "claims occurring" product liability insurance. If you sell guitar pedals in 2019 with a "claims occurring" insurance and then decide it isn't worth it you remain covered. If the customer gets electrocuted in 2050, the claim (your negligence) occurred in 2019, even if the claim isn't made until 2050. (See this page from AON - who just happened to be the first google hit.)

The problem of course is that this shifts the uncertainty from you to the insurer - and they will charge more for this. I suggest consulting an insurance broker.

Another link

  • I will look into the claims occurring liability insurance thanks. What amazes me is that a customer can make a claim for a product sold 30 years ago. Surely a case like that would be thrown out anyway as most electronics are only designed for 3 years use as components degrade and fail, mechanical housings weaken / brake – TheAndyEngineer Jul 11 at 7:21
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    @TheAndyEngineer The law is the same for cheap plastic trinkets as for houses and tunnels. If it turns out that the builders of the Channel Tunnel (opened 25 years ago) were negligent, you can bet your life that Eurotunnel will be suing them. Remember that a litigant can always sue - they just may not be successful (but that will depend on the facts of the case). – Martin Bonner Jul 11 at 8:02
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Indefinitely, subject to any statute of limitations

The relevant legal doctrine is the tort of negligence.

Insurance

You will need two insurance policies:

  • Professional indemnity to protect you from negligence in the design.
  • Public and Products liability to protect you from negligence in the manufacture.

Professional indemnity policies are sold on a claims-made basis which means you need to have the policy in place at the time the person or property is injured by your faulty design. If you cease trading, most insurers sell a "run-off" policy at a reduced premium which covers you for PI in the past (so no new designs) which you need to renew until the statute of limitations runs out.

Public and Product liability policies are sold on an occurrence base which means the policy that responds is the one in place when you manufactured or sold the product. You do not need to maintain this if you stop doing this.

Limited liability

If you form a company to do the design and manufacture then it, not you, is the person responsible. Creditors can only access the assets of the company, not your assets.

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