Importing Products Into Australia? You May Already Be the Manufacturer
If the actual manufacturer has no Australian base, an importer can end up carrying much the same liability. What that means for product liability cover.
Public and products liability cover generally responds when goods a business imports cause injury or property damage, much the same as it would for the business that actually made them. If the real manufacturer has no base in Australia, the importer can end up carrying close to the same liability as if they’d made the product themselves. That’s the starting point for what cover an importing business actually needs.
~650 a year
consumer product recalls reported to the ACCC in Australia
~50%
of recalled products are ever actually returned
Liability, not just risk
an importer can carry much the same exposure as the manufacturer
Am I liable for a product I import if the manufacturer is overseas?
You can be, and this catches a lot of importing businesses off guard. Where the actual manufacturer has no presence in Australia, the business that brought the goods into the country can end up carrying much the same liability as the manufacturer itself. This applies whether the goods are sold on immediately or built into something else entirely.
A component imported from an overseas factory and later found to have a manufacturing defect is a common version of this. If an injured end user brings a claim and the factory itself has no Australian presence to pursue, the claim is directed at the business that imported the component instead. The exposure sits with the importer regardless of how far removed they were from the actual manufacturing.
If the maker is overseas and has no Australian presence, the importer is often the only party a claim can actually reach.
Does product liability insurance cover imported goods?
Generally yes. Public and products liability cover includes products liability as standard, alongside public liability, in one policy.1 It responds to a claim that a product caused injury or property damage regardless of whether the business manufactured, imported or supplied the goods. The conditions are worth reviewing carefully for an importer specifically, since insurers price and word this cover differently once goods are sourced from overseas rather than bought locally.2
What’s the difference between product liability and product recall insurance?
They respond to two different events. It’s a common point of confusion. Product liability responds to a claim that a product actually caused injury or property damage. Product recall responds to the cost of retrieving, replacing or disposing of affected stock, whether or not anyone has been injured at all. A business that manufactures or imports physical products often needs to think about both, not just one.
How many product recalls happen in Australia each year?
The ACCC is notified of around 650 consumer product recalls a year in Australia.3 Only around half of the affected products are ever returned to the seller. That return-rate gap is a real, recurring cost for any business bringing physical products into the country, not a rare event that happens to someone else.
What's actually being imported
The type of product, its intended use and any safety-critical components all shape the exposure.
Country of manufacture
Whether the maker has any Australian presence at all changes who a claim can actually reach.
Testing and certification
Products already tested against Australian standards are generally viewed more favourably by insurers.
Sales volume and turnover
More units in the market generally means a larger potential claim or recall event.
Key Takeaways
- Where the real manufacturer has no Australian presence, an importer can carry much the same liability as if they'd made the product.
- Product liability cover, included as standard in a public and products liability policy, generally responds to imported goods the same way it would for locally made ones.
- Product liability and product recall are separate covers responding to separate events. Both are worth considering.
- The ACCC is notified of around 650 product recalls a year in Australia, with only around half of affected stock ever returned.
- Country of manufacture, testing and certification and sales volume all shape how an insurer prices this risk.
If your business imports products and you’re not sure whether your current cover actually reaches that exposure, Cipher can review it with you. Our Manufacturing & Import/Export page covers the fuller picture for businesses bringing goods into Australia. Get in touch.
The information in this article is general in nature and does not constitute legal, financial or insurance advice. Please speak with a qualified adviser about your specific circumstances.
Footnotes
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Types of business insurance, business.gov.au ↩
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Insurance explained, Insurance Council of Australia ↩
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Over a million recalled products still in circulation in Australia, ACCC ↩
Frequently asked questions
Does product liability insurance cover imported goods?
Generally yes. A public and products liability policy responds to a claim that a product caused injury or property damage, whether that business manufactured, imported or supplied the goods. The conditions are worth reviewing carefully for businesses that import, since insurers assess the exposure differently to a straightforward local retailer.
Am I liable for a product I import if the manufacturer is overseas?
You can be, particularly where the actual manufacturer has no presence in Australia. A business that imports goods can end up carrying much the same liability as the manufacturer itself, whether the goods are sold on immediately or built into something else.
What's the difference between product liability and product recall insurance?
They're separate covers responding to separate events. Product liability responds to a claim that a product caused injury or property damage. Product recall responds to the cost of retrieving, replacing or disposing of affected stock, regardless of whether anyone has actually been injured. A business that manufactures or imports physical products often needs to consider both.
How many product recalls happen in Australia each year?
The ACCC is notified of around 650 consumer product recalls a year in Australia. Only around half of the affected products are ever returned to the seller. That gap between recalls issued and stock actually returned is a real cost most businesses underestimate.
Is product liability insurance the same as public liability insurance?
They're arranged together as one policy rather than two separate ones. Public liability responds to injury or damage caused by business activities generally. Product liability responds specifically to injury or damage caused by goods a business manufactures, imports or supplies. A public and products liability policy covers both.
Do I need product liability insurance if I only sell a product, not make it?
It's still worth reviewing, especially if you're importing directly rather than buying from an Australian distributor. Where the actual manufacturer is based overseas, the business that brought the goods into Australia can carry liability similar to the manufacturer, not just the seller.
What information do insurers need to quote product liability cover for an importer?
Insurers typically ask what the products are, where they're manufactured, the countries they're imported from, annual turnover, sales volumes, any product testing or certification in place and claims history. Presenting this clearly to the market makes a real difference to both price and terms.
Questions about your cover?
Cipher can review your current position and explain what you actually have.
Talk to Cipher