The Custodian Insurance Industry Blog

January 22, 2019

Are Technology Firms offering a product or service, and does PI insurance cover both?

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?

Service

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.

Products

In addition to this it is also required by statute that the goods (the technology that your IT clients 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 your client were to make a public statement about the goods in a newspaper, for example.  They 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 our PI Insurance help?

If any express terms agreed between your IT client and the consumer, or implied terms by the Consumer Rights Act 2015 are breached this can result in the customer bringing a claim against your client.

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
  • 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.

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 what will be covered.

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 info@custodianinsurance.co.uk or call 0207 648 4343.

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