Brexit liability insurance and UK-Dutch consequences 2022

4 december 2021

The United Kingdom anno 2021 is a third country for the European Union and so the Brexit liability insurance should be changed. The legal liability for customers and Dutch-firms and UK-firms has changed since January 2021. Below you find simple explanation and the consequences for EU-firms and UK-firms.

Example Brexit liability insurance

Example Brexit liability insurance claim. You are a UK-bicycle firm. You sell your bicycles to the Netherlands. Due to a construction error, the front brake locks and the Dutch-cyclist falls seriously; Hospitalization and a long rehabilitation is the result. In other words, personal injury liability and a huge financial claim. The Dutch lawyer of the cyclist will sue the Dutch-reseller (and not the UK firm). Due to EU regulation the EU reseller is directly liable for the damages. The Dutch liability insurer will not always cover such a product from a third country. Our English liability form.

UK- and Dutch manufacturers disadvantage

Dutch Product liability insurers will be reluctant to incorporate liability risks in their insurances. Due to change in legal “Brexit” liability, insurance is worth giving a rethink. Dutch resellers will be aware of these risk and will sometimes be reluctant to sell UK products and choose EU based firms to divert these liability risks.

Liability insurance consequences in the UK

The same legal changes are for Dutch producers and manufacturers who are selling products to the UK. Check always the legal consequences of your product liability in EU or within your country to be sure. Due to Brexit liability changes the general (third party) liability insurance and product liability insurance must be scrutinized.

Details Third Country producer

Your product liability is that you are an outside EU producer, a so called Third Country producer. If your product is the cause of an accident or damage. a Dutch customer can’t claim a financial loss directly. The Dutch-reseller (retailer) will be sued. European legislation does not have any legal base in the UK (from 1 January 2021). It will be difficult for a European to legally challenge a UK firm for there product liability. A consumer will try to get his compensation by suing the EU reseller (of the UK) product. That seems a nice relief for the responsibility of the company based in the UK. But a Dutch-retailer will think twice before selling UK-goods. Liability insurances in the EU as the UK needs to be revised.

Because of the legal consequences and
Because the EU-insurer will abandon the liability cover for goods produced in the UK as an outside producer of a Third Country. The quality and the safety regulation may not be sufficient aligned with the EU-zone. So therefore, the EU/UK insurer may decline cover for a product liability insurance.

Dutch company selling products in the UK

Before, the UK is within the EU-zone. Awaiting Brexit liability insurances were not so interesting due to the legal framework. Therefore, the UK product liability (before the transition) treated a UK firm as an inside EU producer. A UK-EU customer could claim a financial loss directly with your firm if your product is the cause of an accident or damage. This is also due to the current European legislation. Product liability insurers have clauses which incorporate these product liability insurances. But all that has changed.

Brexit liability insurance and legal consequences for the EU firm

Retailers and consumers in the UK en the other EU countries were always allowed to sue you directly if there is a product liability. Retailer who sell your products are not liable can be transfer the claim to the EU producer.

After the transition the UK is outside the EU-zone. Therefore, your EU product liability at this moment is that you deliver to an outside Third Country. A UK-customer will first put his claim to the UK retailer of your product. The retailer of your product won’t be pleased because they didn’t produce the product. But the consequence can be that you, as a EU-producer, will be held financial liable. It will be difficult to enforce. Of course, retailers and consumers in the UK are always allowed to sue you but it will be legally complicated if they are not situated within the EU-zone.

Most UK-retailers will try to find domestic products to replace the EU-products if they are not able to insure these risks.

What to do with your old Brexit liability insurance?

Are you an importer of products from the UK, check your company product liability insurances. Make sure that your new “own” liability for those products is correctly insured on those insurances. Make sure your (Dutch) insurance policy is up to date. This is essential for Dutch retailer who will get liable if they sell UK products and get sued if there a liability occurs with a Third Country product, such as the UK will be in the future.

UK's post-Brexit product liability and safety laws 'could cause confusion' – https://t.co/3IvwXqJ6zB – https://t.co/LZRhE65gDV
— ChronLAW | News for Legal Professionals (@ChronLaw) June 3, 2020

CE Marking and Brexit liability insurance

https://twitter.com/davidmaceyactor/status/1344492719175942147

Legal contracts

Assess the contractual relationships with trading partners in the United Kingdom en vice versa. Check which liability risk is run by your company if a property damage or personal injury is caused by a product from the United Kingdom and vice versa. Contractually, this must be clearly and legally enforceable. Please ask always legal advice to make sure these are legal correct formulated.

UK Product safety advice for businesses

Dutch product liability insurances before and after exiting EU

Be also aware of the consequences of “old” claims from the period before and after the transition. Often a claim appears many years later in a different time and with different legal and financial consequences. Especially the “claim made” clause must be scrutinized.