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How could the EU’s updated Product Liability Directive impact you?

22/08/2025 · 5 minute read

3 Perspectives

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European Commission Perspective on the Product Liability Directive

Featuring Omar Ennaji (Legal & Policy Officer –DG GROW, European Commission) and Lorraine Stack (Risk Management Leader, Europe, Marsh) outlining the revised Product Liability Directive in the European Union.

Legal Perspective on the Product Liability Directive

Featuring David Meheut (Partner, Clyde & Co France) explaining the legal perspective of the revised Product Liability Directive in the European Union.

Insurance Perspective on the Product Liability Directive

Featuring Henrik Kjellwall (Casualty Practice Leader, Sweden), Mieke Piro (Senior Client Advisor FINPRO, Belux) and Jaymin Kim (Managing Director, Emerging Technologies, Global Cyber Insurance Center) from Marsh explaining the insurance perspective of the revised Product Liability Directive in the European Union.

The updated Directive modernises the legislation for the digital age and tackles global supply chains

Directive (EU) 2024/2853, also known as the New EU Product Liability Directive (Directive), came into force on 9 December 2024, and must be adopted into Member States' national laws by December 2026. The directive will apply to products placed on the market or put into service after 9 December 2026.

This legislation replaces the previous one from 1985 and has been updated to more comprehensively cover risks for modern trade, by modernizing the definition of a product, enlarging the scope of coverage to all the parties in the value chain, and broadening the scope of damage.

The definition of a product has been updated to “all movables, even if integrated into, or inter-connected with, another movable or an immovable; it includes electricity, digital manufacturing files, raw materials and software”.

The Directive creates a level playing field between EU manufacturers and non-EU manufacturers. If the manufacturer is not established in the EU, importers or authorised representatives are liable. If there are no importers or authorised representatives, fulfilment service providers, distributors, and online marketplaces could be held liable.

The Directive extends damage to cover “medically recognised damage to psychological health”.

Article 7 establishes the scope for which a product can be considered defective, “A product shall be considered defective where it does not provide the safety that a person is entitled to expect or that is required under Union or national law”. A cybersecurity failure of a product can be a defect.

The Directive maintains the strict liability of the manufacturer of the product and the liability regime set up by the first product directive. The burden of the proof remains on the injured person, but is eased by a presumption of defectiveness and a causal link when the manufacturer fails to disclose information.

Article 9 states, “Member States shall ensure that, at the request of a person who is claiming compensation in proceedings before a national court for damage caused by a defective product (the ‘claimant’) and who has presented facts and evidence sufficient to support the plausibility of the claim for compensation, the defendant is required to disclose relevant evidence that is at the defendant’s disposal, subject to the conditions set out in this Article”.

Organisations cannot limit their liability under this directive as laid out in Article 15, “Member States shall ensure that the liability of an economic operator pursuant to this Directive is not, in relation to the injured person, limited or excluded by a contractual provision or by national law”.

The liability continues after products are placed on the market for software upgrades/updates (under the manufacturer’s control), for failure to provide updates to address cybersecurity risks, and for machine learning.

The Directive limits the time an injured party can initiate the proceeding for a claim to three years from the time they became aware of the damage, defectiveness, and the identity of the relevant economic operator that can be held liable for that damage. The time limit for claims from which point the product was placed on the market remains at 10 years but has been extended to 25 years in instances where those affected wouldn’t have known that the cause of the injury was from the product.

While the definition of damage used to include third-party damage to property, personal injury, or death, the new directive extends the definition to psychological harm and loss or damage to data.

The burden of proof for liability is limited to:

  • Product was defective
  • Loss suffered
  • Causal link between the loss and the defectiveness of the product

This Directive calls for a refreshed view on some insurance contracts, particularly comprehensive general liability (CGL) and professional liability (PI) ones. To highlight a few points:

  • On the CGL, the definition of insured product has to be reviewed to comply with the new definition of “product”, that is, no limitations related to software.
  • From a cybersecurity perspective, the term defective also refers to data leaks. Failure to provide software updates to fix cybersecurity risks could leave your organisation exposed. Cyber exclusion under CGL and PI should also be reviewed.
  • The fact that software is considered a product could call for merging some tech PI and CGL/product liability and cyber liability covers to ensure there is no gap or overlap in coverage. 

Our experts could advise on wording solutions to provide you with the coverage you need.

Marsh hosted an in-depth webinar on the new Directive with a panel of expert speakers, including Omar Ennaji from the European Commission, who contributed to write the Directive and David Meheut from the legal firm Clyde and Co. You can watch the key takeaways in the videos above.

Need more details on the directive's impact? Speak to the Marsh team today to make sure you're covered

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