Product liability and insurance in Estonia (new EU directive)

Manufacturers, importers and distributors placing products on the Estonian market face strict liability for defective products under the Law of Obligations Act (võlaõigusseadus, VÕS) §§ 1061–1067, which implement the EU Product Liability Directive 85/374/EEC.¹ The legal landscape is about to change: the new Product Liability Directive (EU) 2024/2853 must be transposed by 9 December 2026, and the old directive is repealed from that date, while continuing to apply to products placed on the market before it.² This guide explains the current Estonian rules, the transition and the insurance implications.

1. Strict liability of the producer (VÕS § 1061)

The producer is liable for death, bodily injury or damage to health caused by a defective product (§ 1061 lg 1). For damage to property, the producer is liable only if:

1. the item is of a type ordinarily intended for private use or consumption;
2. the injured person used it mainly for private purposes; and
3. the damage exceeds an amount corresponding to EUR 500 (§ 1061 lg 2).¹

The producer is not liable for damage to the defective product itself (§ 1061 lg 3). Liability for defective medicinal products follows the same rules unless otherwise provided (§ 1061 lg 4).

Business-to-business property damage is therefore outside the strict liability regime and must be pursued in contract or under fault-based tort liability (§ 1043).

2. Who is a producer?

Section 1062 defines the producer broadly: the manufacturer of the final product, of a component or of raw material; any person presenting himself as producer by putting his name, trademark or other distinguishing feature on the product; and any person who, in the course of business, brings the product into Estonia or another EU Member State for sale, lease or other distribution. Where the producer cannot be identified, every person who supplied the product to the injured person is treated as producer unless he names the producer or his own supplier within a reasonable time.¹ Section 1063 defines the product and the defect.

3. Defences and burden of proof

The producer is not liable if it proves that it did not put the product on the market, that circumstances indicate that the defect did not exist when the product was put on the market, that the product was neither manufactured for sale or other distribution nor manufactured or distributed in the course of its business, that the defect is due to compliance with mandatory requirements in force at that time, or that the state of scientific and technical knowledge did not allow the defect to be discovered (§ 1064 lg 1). Component producers have an additional defence (§ 1064 lg 2), and the producer's liability is not reduced where the damage was caused both by the defect and by a third party (§ 1064 lg 3).¹ The injured person must prove the damage, the defect and the causal relationship (§ 1065).

4. Time limits

Claims expire three years from the day on which the injured person became aware or should reasonably have become aware of the damage, the defect and the identity of the producer (§ 1066 lg 1). Independently of this, claims are extinguished on the expiry of ten years counted from the day following the day on which the product that caused the damage was put on the market, unless an action has been filed in court by then (§ 1066 lg 2). The ten-year cut-off does not apply to a claim recognised by a final court judgment or arising from another enforcement instrument, to a claim whose existence has been acknowledged by agreement, or to a claim arising from a new right acquired under a compromise (§ 1066 lg 3).¹ Agreements limiting or excluding the producer's liability are void (§ 1067).

5. The new Product Liability Directive (EU) 2024/2853

The new directive defines "product" to include software (and thus AI systems), digital manufacturing files and electricity, and brings integrated or inter-connected digital "related services" within its scope; it introduces disclosure of evidence (art 9) and rebuttable presumptions of defectiveness and causation (art 10); it covers destruction or corruption of data not used for professional purposes and medically recognised damage to psychological health; and it lists compensable property damage without the former EUR 500 lower threshold, while excluding property used exclusively for professional purposes (art 6). Member States must bring their implementing measures into force by 9 December 2026; the directive applies to products placed on the market or put into service after that date.² As at 3 November 2026, the consolidated texts of the Law of Obligations Act published in Riigi Teataja, including the future versions in force from 1 January 2027 and 1 March 2029, still contain the former product liability rules, including the EUR 500 threshold for property damage (VÕS § 1061(2)).

For insurers, the main consequences are:

• broader insured exposure for software and AI providers, including those not traditionally buying product liability cover;
• increased litigation risk through disclosure and presumptions;
• the need to review "products" and "your work" definitions, data exclusions and cyber exclusions in liability wordings;
• a long transitional tail, because the old regime continues for products placed on the market before 9 December 2026.

Transposition status and the transition gap (as at 5 November 2026)

The Ministry of Justice and Digital Affairs began preparing the transposition in 2025 and has circulated for consultation a draft act amending the Law of Obligations Act and its implementing act (in Estonian: võlaõigusseaduse ning võlaõigusseaduse, tsiviilseadustiku üldosa seaduse ja rahvusvahelise eraõiguse seaduse rakendamise seaduse muutmise seaduse eelnõu (uue tootevastutuse direktiivi ülevõtmine)).³ Until the implementing act enters into force, VÕS §§ 1061–1067 apply in their current wording.

If transposition is late, a gap opens for products placed on the market or put into service from 9 December 2026 (Article 2(1) as corrected by the corrigendum OJ L 2026/90364 of 7 May 2026 refers to products placed on the market or put into service after 8 December 2026). A directive cannot of itself impose obligations on a private party. Estonian courts must interpret national law as far as possible in conformity with the directive, but not contra legem: the express EUR 500 threshold in VÕS § 1061(2) cannot be interpreted away. Where the directive's result cannot be achieved by interpretation, the injured person's remedy is a claim against the State for late transposition.⁴ For insurers this means that claims involving products placed on the market in late 2026 and 2027 may raise a dispute over which regime applies and how far conforming interpretation reaches. Wordings that tie product liability cover to a named statute or "the law in force at inception" should be checked against the new regime.

6. Product liability insurance

Product liability is usually covered within general liability policies (often with a products/completed operations aggregate) or as standalone cover. Estonian-law points:

• Trigger. Occurrence-based (damage during the policy period) under VÕS § 510, unless claims-made is agreed; with a ten-year long-stop, long-tail exposures are relevant.
• Notification of circumstances and claims within one week (§ 514).
• Defence costs and costs outside limits (§ 511).
• No direct action in voluntary liability insurance, but protection of the injured party in the insured's bankruptcy (§§ 517–518).
• Recall costs are generally not covered by liability policies (they are not damages to a third party) and require separate product recall or contamination insurance.
• Large risks. For qualifying policyholders, general liability is among the classes where the semi-mandatory rules do not apply (§ 427 lg 3), giving more contractual freedom.¹

7. Recovery by property insurers

A property insurer that pays for damage caused by a defective product (for example a fire caused by a household appliance) acquires the insured's claim (VÕS § 492) and may pursue the producer or importer under §§ 1061–1067 if the private-use conditions are met, or otherwise in contract or tort. See subrogation and recovery services.

Related pages

• Liability insurance and direct action
• Subrogation and recovery in Estonia
• War exclusions and cyber
• Large risks
• Glossary

References