Costs, Price Factors and 2026 Rules
Product liability insurance for importers and online sellers in Australia
How the Australian Consumer Law can make an importer liable as the manufacturer, what products liability cover pays, recall and reporting duties, and pricing factors.
If you import goods into Australia and the overseas maker has no place of business here, the Australian Consumer Law (ACL) generally treats you as the manufacturer. That means an injured person, or someone whose property was damaged by a safety defect in the goods, can claim directly against you under Part 3-5 of the ACL, without proving negligence. Products liability insurance, usually sold together with public liability as a "broadform" policy, pays compensation and legal costs for those claims. It does not pay to recall or replace the goods, which needs separate cover.
This guide is part of the public liability cost overview. Figures are illustrative. If you also give product advice, see public liability versus professional indemnity; for covers required by law, see compulsory business insurance.
When an importer or seller is treated as the manufacturer
The ACL, set out in Schedule 2 of the Competition and Consumer Act 2010, defines "manufacturer" widely. Under section 7, a person can be treated as the manufacturer of goods if they:
- make, produce or assemble the goods;
- hold themselves out as the manufacturer, for example by putting their name or brand on the goods;
- allow their name or brand to be used on the goods as the manufacturer; or
- import the goods into Australia when the actual manufacturer does not have a place of business in Australia.
Retailers and online sellers who are not the importer can also be pursued: under section 147, if an injured person cannot identify the manufacturer, a supplier who does not identify the manufacturer or its own supplier within 30 days of a written request can be treated as the manufacturer.
What Part 3-5 liability covers
Part 3-5 makes manufacturers liable for loss caused by goods with a safety defect, meaning their safety is not what people are generally entitled to expect. The heads of loss include:
| ACL section | Loss covered |
|---|---|
| s 138 | Injury to an individual (and loss suffered by the injured person) |
| s 139 | Loss suffered by others because of that injury, such as dependants |
| s 140 | Damage to other goods of a kind ordinarily used for personal, domestic or household purposes |
| s 141 | Damage to land, buildings or fixtures ordinarily used for private purposes |
Defences in section 142 include that the defect did not exist when the goods were supplied, that it could not be discovered given the scientific and technical knowledge at that time, and that it existed only because of compliance with a mandatory standard. Claims generally must be brought within 3 years of the person becoming aware of the loss, the defect and the manufacturer's identity, and within 10 years of the goods being supplied by the manufacturer (section 143).
Separately, consumers can seek damages from manufacturers under the consumer guarantees, and anyone can sue for negligence or breach of contract. A products liability policy usually responds to legal liability for injury and property damage, whichever legal route is used.
What the insurance pays and what it does not
| Usually covered | Usually not covered |
|---|---|
| Compensation for bodily injury caused by your products | Cost of recalling, replacing or repairing the faulty goods |
| Damage to third-party property caused by your products | Refunds under the consumer guarantees |
| Defence costs (inside or on top of the limit, depending on the wording) | Financial loss from goods simply not working, where nothing is damaged |
| Claims anywhere in the policy territory | Claims from goods exported to excluded territories, often the USA and Canada |
| Products sold during or before the policy period, if the occurrence is during it | Known defects not disclosed to the insurer |
Products liability limits are usually in the aggregate for the policy period. A $20 million aggregate means all products claims in the year share that $20 million, unlike public liability, which usually applies per occurrence.
Recall and injury reporting duties
Two ACL duties matter to importers and sellers of consumer goods:
- Recall notice. A supplier who voluntarily recalls consumer goods because they may cause injury must notify the responsible Commonwealth minister within 2 days of taking the action. In practice notice is given through the ACCC's Product Safety Australia website.
- Mandatory injury reporting. A supplier who becomes aware that a death, serious injury or illness was caused, or may have been caused, by the use or foreseeable misuse of consumer goods it supplied must report it within 2 days.
The costs of a recall, such as logistics, advertising and destruction, are generally excluded from liability policies. Product recall insurance is a separate product.
How importers are priced
Insurers typically ask for:
- product types and where they are made;
- annual turnover by product line and import value;
- whether the goods meet any mandatory standard or ban that applies;
- quality control: supplier audits, test certificates, batch tracking;
- whether goods are sold online and whether any are shipped overseas;
- claims, complaints and recalls in the past five years.
Illustrative example: an importer of children's furniture and an importer of cotton tea towels might have the same $1.2 million turnover, but the furniture importer faces mandatory standards, tip-over risks and young users, so its premium could be several times higher. Exports to the USA could add a significant loading or be excluded entirely.
Practical steps before you buy
- List every product line and its country of manufacture.
- Check whether the overseas manufacturer has an Australian place of business; if not, assume you are the manufacturer under the ACL.
- Check mandatory standards and bans on Product Safety Australia.
- Ask suppliers for test reports and their own product liability insurance, and record them.
- Decide whether you need the USA or Canada in the territory.
- Compare quotes on aggregate limit, excess and recall exclusions using the quote comparison tool.
Frequently asked questions
I sell through an online marketplace. Do I need products liability?
If you import, brand or sell goods, you can be pursued for injury or damage they cause. Many marketplaces also require sellers to hold product liability cover. Check the marketplace terms and your exposure as an importer.
Does my overseas supplier's insurance protect me?
It may help if a claim can be pursued against the supplier, but you can still be liable in Australia. Ask whether you can be noted on the supplier's policy and check it covers Australia.
Is products liability included in public liability?
Many Australian policies are "broadform public and products liability", which includes both, but some exclude products or set a lower products limit. Check the schedule.
Are defects in my own goods covered?
No. Liability policies do not pay to replace or fix your own products; they pay for injury and damage the products cause to others.
Sources
- ACCC — Australian Consumer Law guidance for businesses, manufacturers and importers
- Product Safety Australia — mandatory standards, bans, recalls and mandatory injury reporting
- Federal Register of Legislation — Competition and Consumer Act 2010, Schedule 2
- business.gov.au — guidance on importing and product safety
