What is Efficacy insurance?

Efficacy Insurance is designed to cover the failure of an item or service to perform its intended function. It is also known as Failure to Perform insurance.

Efficacy insurance is commonly required by businesses involved in the manufacture, service, supply or installation of performance critical products. In fact, trades involved with fire, security or electrical contracting will often have to prove they have efficacy cover before they are granted a contract or permitted to join their trade body.

Similar requirements are often asked of manufacturers and suppliers of safety critical items, such as medical devices or vehicle safety components.


Although efficacy insurance is normally purchased as part of a public & products liability policy, many standard public liability and products liability policies will exclude efficacy cover, so it is essential that you check that you have the correct level of cover your business requires. This is particularly relevant in performance and safety critical products and services. For example, if you are manufacturing, supplying or installing smoke detectors and a building with your detector burns to the ground with multiple casualties, a standard public & products liability insurance policy will be unlikely to cover you if the smoke detector had failed to work correctly, unless efficacy cover is included.

If your business provides consultancy, advice, testing or designs you may also need professional indemnity insurance. If you want to insure against the costs of your product not meeting specifications, standards, or posing a safety risk, you may need product guarantee and/or product recall insurance.

If you believe the failure of your product could have far reaching consequences then please get in touch – we have decades of experience helping our clients with their efficacy insurance.

We can help you understand what insurance you do, and do not, need