Product liability

Product liability is a legal regime that places on the producer the obligation to make good the damage caused by a defect in its product, without the victim having to prove fault, but only the defect, the damage and the causal link. Originating in Europe in the 1985 directive, this regime initially targeted tangible goods. Its relevance to the digital sphere was long uncertain, since software or an artificial intelligence model is hard to characterize as a product in the classic sense. The revision of the directive adopted in 2024 removes this ambiguity by explicitly including software and AI systems within its scope, and by adapting the notion of defect to the particularities of the digital world, such as updates, continuous learning and cybersecurity. This development is major for insurance, because it clarifies a whole swathe of AI-related liability by opening to victims a route to redress against the producers of defective systems. It shifts part of the risk toward vendors and complicates the mapping of responsibilities along chains that mingle the model designer, the integrator and the deployer, each potentially exposed to a claim.