Developments in the liability regime for defective products: analysis of directive 2853

Our experts analyse the new Product Liability Directive 2024/2853 and its impact on the Insurance Sector.

On November 18, 2024, Directive 2024/2853 of the European Parliament and of the Council, of October 23, 2024, on liability for damage caused by defective products, which will repeal and replace the 1985 Directive - whose transposition in Spain can be found in Royal Decree 1/2007, on the General Defense of Consumers and Users.

This new Directive, which will be applicable to products placed on the market or put into service as of December 9, 2026, aims to modernize the current regime for defective products, thus adapting the legal framework to the new challenges arising from technological innovation, such as artificial intelligence, cryptocurrencies, the circular economy and complex international supply chains.

In this new context, one of the fundamental objectives of the Directive is to guarantee that consumer rights are duly protected without this representing an obstacle to innovation, a particularly relevant aspect in an environment characterized by the constant emergence of disruptive technologies that modify the relationships between producers and consumers.

From the Clyde & Co 'Professional and Financial Disputes' team, we highlight the main developments and changes introduced by the Directive, and its foreseeable impact on the insurance market:

Extension of the scope of application:

A key aspect of the Directive is the broadening of the concept of “product”, which now includes, in addition to traditional movable goods, intangible products (such as gas, electricity or water), digitally manufactured files and software.

Clarification of the concept of “defect”:

Article 7 of the Directive maintains the concept of “defect” included in the 1985 Directive, defining a defective product as one that does not meet the level of safety that a person may reasonably expect. However, the new Directive introduces certain additional parameters to be taken into account in assessing whether the product presents a reasonable level of safety.

Expansion of the list of responsible parties:

Regarding the responsibility of the actors within the supply chain, the Directive, in addition to mentioning the classic subjects (manufacturers, importers, distributors, etc.), extends the liability regime to: (i) developers and operators who substantially modify the product after it has been placed on the market or put into service; (ii) the authorized representative, the logistics service provider or the importer (in the event that the manufacturer is located outside the EU); and (iii) in certain cases, online platforms that facilitate distance contracts. Furthermore, in cases where it is not possible to identify the responsible party or where the latter is insolvent, Member States will be empowered to establish compensation systems to protect victims.

These changes respond not only to the growing complexity of modern supply chains, but also to the sophistication of the products themselves, which often include advanced materials, software and components from different sources. In addition, this approach seeks to ensure that consumers can identify a clear responsible party, even in the case of products assembled from parts from various global suppliers.

Liability regime:

The main changes introduced by the Directive to the system of strict liability of the producer/manufacturer are as follows:

-The Directive establishes the right to compensation for individuals harmed by defective products, covering not only compensation for death, bodily injury and material damage, but also: (i) medically recognized psychological damage; and (ii) the destruction or corruption of personal data not intended for professional use. This right to compensation extends to third parties, such as insurers, who may be subrogated to the rights of the injured parties, which could lead to an increase in subrogation actions in the courts.

With regard to the burden of proof, Article 10 maintains that the plaintiff has the burden of proving the defect in the product, the damage caused and the causal link. However, the Directive introduces certain presumptions of fact that make it easier for the injured party to prove his case. Thus, the product is presumed to be defective when: (i) the defendant fails to provide available information that has been requested; (ii) the plaintiff proves that the product does not meet the safety standards applicable by law; or (iii) the damage is caused by the product malfunctioning during reasonable use of the product.

The Directive keeps the grounds for exemption of the liable parties practically intact, although it eliminates the possibility for Member States to set a monetary limit on aggregate liability for damages caused by identical items with the same defect.

- With regard to the time at which the damage must appear, the Directive maintains the limitation period of ten years from the introduction of the defective product into the market or its commissioning. However, in exceptional cases such as late-onset injuries, the period is extended to twenty-five years.

Finally, with regard to the deadlines for filing claims, the Directive maintains the three-year limitation period for initiating claims, which begins to run from the moment the victim becomes aware of the damage and the identity of the person responsible.

Impact of the new Directive on the Insurance Sector:

Directive 2024/2853 represents a major change in consumer protection within the European Union and provides a level of protection appropriate to the needs of an increasingly digitalized and globalized market. This regulation, which harmonizes the rules of liability for defective products, reinforces the rights of consumers in the technological era, guaranteeing both the protection of the user and legal certainty for manufacturers and other operators in the supply chain.

However, we believe that the implementation of this Directive poses significant challenges for the insurance sector, which will have to adapt its policies to cover the risks arising from digital products, software, psychological damage and the destruction of personal data. The extension of liability to different actors, the presumptions of evidence in favor of the consumer and the extension of the expiration period in cases of latent injuries will force insurers to review their risk management models and their strategies against accidents.