The Custodian Insurance Industry Blog

October 17, 2018

Are Technology Firm’s offering a product or service, and does your PI insurance cover both?

Services and products are two areas where we think the differences are obvious, but in terms of your PI Insurance is this really the case?

Often it can be confusing when determining whether something is a service or a product. There are many situations where this can be easily identifiable and some situations where it may not. For example, if you were to attend a hairdressing salon the hairdresser who is cutting your hair will be providing the service, and any hair products that you decide to buy from the salon will be product.

The difference between a product and service

Therefore a ‘service’ is an activity which is performed, and a ‘product’ is usually a tangible thing such as a car, mobile phone, computer, or in your case the technology you supply.

What does the law say about services and products?


It is important to note that the Consumer Rights Act 2015 implies a term into any contract for a service that it must be carried out with reasonable care and skill. Additionally the service must be performed within a reasonable amount of time.

If the service has not been carried out with reasonable care and skill or within a reasonable time then the consumer has the option to either require repeat performance of the service, or get a price reduction.


In addition to this it is also required by statute that the goods (the technology that you supply) is of satisfactory quality.

The quality of the goods will be satisfactory if they meet the standard that a reasonable person would consider satisfactory taking account of: the description of the goods, the price or other consideration for the goods, and other relevant circumstances. Another relevant circumstance would be if you were to make a public statement about the goods in a newspaper for example, you would need to be sure that the goods complied with this statement.

Additionally the goods supplied must be exactly as described.

If the implied terms mentioned above are not met then the consumer is allowed to exercise various rights and remedies.

These include:

  • the right to reject;
  • the right to repair or replacement; and
  • the right to a price reduction or a final right to reject.

(Please see the Consumer Rights Act 2015 for more detail on the information above)

How does your PI Insurance help?

If any express terms agreed between you and the consumer, or implied terms by the Consumer Rights Act 2015 are breached this can result in the customer bringing a claim against you. Unfortunately there are situations where a breach may occur.

However, having a PI Insurance Policy in place can help to cover certain losses in this situation and not result in a breach being detrimental to your business.

Our Technology Professional PI Insurance Policy can indemnify you for the following:

  • an unintentional breach of an express or implied term in a contract for the design or supply of IT products resulting in a claim against you by a client,
  • an unintentional breach of any of the terms implied by statute for the design or supply of IT products concerning quality, safety or fitness for purpose,
  • a material defect in any IT products.

Therefore having PI Insurance is a massive benefit for your business in case there does ever come a time when a breach occurs!

Please let us know if you would like to look at the full terms and conditions of our PI Insurance Policy. We would be more than happy to help explain to you exactly what will be covered.  

Important points to remember

  • Make sure you are aware of the terms that are implied by The Consumer Rights Act 2015,
  • think carefully before agreeing to something beyond the scope of the terms implied by statute,
  • know exactly where you stand with your PI Insurance policy!

Get in contact

If you have any questions regarding your policy or anything mentioned in this article then please do not hesitate to get in contact!  Just contact or call 0207 648 4343.

We’d love you to stay in touch with us in whichever way you prefer