NEW PROPERTY & CASUALTY INSURANCE

PRODUCTLAIBILITY
WhatisProductLiability Product liability is the area of law in which manufacturers, distributors, suppliers, retailers, and others who make products available to the public are held responsible for the injuries those products cause. Product liability insurance protects the business from claims related to the manufacture or sale of products, food, medicinesorothergoodstothepublic.Itcoversthemanufacturer'sorseller'sliabilityforlossesorinjuriesto a buyer, user or bystander caused by a defect or malfunction of the product, and, in some instances, a defectivedesignorafailuretowarn.Whenitispartofacommercialgeneralliabilitypolicy,thecoverageis sometimescalledproductscompletedoperationsinsurance. Product Liability Basis Therearegenerallythreetypesofproducts"claims"acompanymay face: Manufacturing Design Failure to 1. Manufacturing or Production Flaws A claim Defect Defect Warn that some part of the production process created an unreasonably unsafe defectintheresultingproduct.Recent Faulty Mfg. Process Malfunction Failure to Ineadequate Reasonable Alternative Design Product or Packaging Warn Warning claims against Chinese manufacturers Hardest to Prove regarding the presence of dangerous chemicalsintheirproductsareanexampleofthistypeofclaim. 2. Design Defect A claim that the design of the product is inherently unsafe. The most memorable exampleistheseriesofPintocarcasesagainstFordinthe1970's. 3. Defective Warnings or Instructions The claim that the product was not properly labeled or had insufficient warnings for the consumer to understand the risk. The McDonald's "coffee case" is an example. The damages awarded in these claims include medical costs, compensatory damages, economic damages, and, in some instances, attorneys' fees, costs and punitive damages. Product liability claims can and do put businesses out of business just ask any of the officers from any asbestosmanufacturer. DecidingtheSumInsured: Notwobusinessesarethesameandthereisnosingleamountofcoverthatsuitsall.Nobodyknowsbusiness and the exposure it faces better than a person running it. It is advisable to buy as much cover as one can reasonablyafford.Often,clientwillsetaminimumlimitoftheindemnitytheyrequire. WhatisPayable Policy indemnifies the insured all sums which the insured shall become legally liable to pay as damages in consequenceofaccidentaldeath/bodilyinjuryordiseasetothirdpartyordamagetotheirpropertyarisingout of any defect in the products manufactured and covered under the policy after such products have left the insuredspremises. MajorExclusions o ProductRecall,Deliberate,willfulorinternationalnoncomplianceofanystatutoryprovision, o Lossofgoodwill,lossofmarket,Fines,penalties,punitive/exemplarydamages, o WarandWarlikesituations,AnylossoccurringpriortotheRetroactiveDatementionedinthepolicy. MajorExtensions o Exports:ExportsofproductstoUSA,Canada,Europeandothercountriesalsocanbeinsuredunder thepolicy. o VendorsLegalLiability:Thepolicycanbeextendedtoincludetheliabilityofvendors. o TechnicalCollaboratorLiability:TheliabilityarisingoutofanyagreementofTechnicalCollaboration canbecoveredasanextension.

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