| Products Liability Insurance: |
If your company manufacturers, distributes or sells products to the public or other businesses, then your business needs product liability insurance.
Product Liability Insurance coverage protects manufacturers and suppliers when claims are made for injuries and damage incurred in the use of their
goods or products.
Products Liability refers to the legal liability of manufacturers and sellers to compensate buyers, users, and even bystanders, for damages or injuries
suffered because of defects in goods purchased or used. For instants a manufacturer becomes liable if their product has a defective condition that makes
it unreasonably dangerous to the user or consumer. In most cases the ultimate responsibility for injury or damage in a products liability case most
frequently rests with the manufacturer, but at times liability may also be imposed upon a wholesaler or retailer and many other third parties who might be
held liable for the injury caused by a defective product.
Companies that do not equip themselves with this type of coverage risk if a crisis occurs, may risk the following financial threats:
When purchasing and making decisions about products liability coverage, you should consider the following:
Those manufacturers or distributors that have the Claims Made coverage form and that shut down their operations may elect to buy "tail" coverage which
in effect converts their prior Claims Made policies into an Occurrence policy; however, this can be too expensive for many to afford.
Changing a Claims Made policy from one carrier to a new carrier upon renewal may be a bit tricky because of a provision in a Claims Made policy known
as a "Retroactive Date." It is of critical importance that the "Retroactive Date" is always set to be the first date that the first Claims Made policy was effective.
Even though the Occurrence coverage form is clearly superior for the reasons stated above, many start up operations opt for Claims Made coverage due
to the afford ability issue.
The above descriptions on the topics of Occurrence, Claims Made, bodily injury, property damage, coverage triggers, retroactive dates, and tail coverage
have been greatly simplified for explanation purposes. You should always consult with a business insurance professional before making critical
decisions in these areas.
Product Liability Insurance coverage protects manufacturers and suppliers when claims are made for injuries and damage incurred in the use of their
goods or products.
Products Liability refers to the legal liability of manufacturers and sellers to compensate buyers, users, and even bystanders, for damages or injuries
suffered because of defects in goods purchased or used. For instants a manufacturer becomes liable if their product has a defective condition that makes
it unreasonably dangerous to the user or consumer. In most cases the ultimate responsibility for injury or damage in a products liability case most
frequently rests with the manufacturer, but at times liability may also be imposed upon a wholesaler or retailer and many other third parties who might be
held liable for the injury caused by a defective product.
Companies that do not equip themselves with this type of coverage risk if a crisis occurs, may risk the following financial threats:
- Bankruptcy
- Possible closure of the company
- Loss of credibility
- People boycotting your brand
- Stock Collapse
- Legal Claims
When purchasing and making decisions about products liability coverage, you should consider the following:
- Do you sell products world wide? Consider that the standard business insurance policies that are sold in the U.S., may not be sufficient enough to
cover foreign exposure.
- Does your policy have Additional Insured Coverage? Generally most manufacturer's have a sleuth of people of whom it may use to design, finance
or sell for them, this would require the manufacturer's insurance to cover these services on an additional insured such as:
- Vendors, Wholesalers
- Sales People
- Engineers and/or consultants
- Medical Staff Members
- Advisory Boards
- and more!
- Do you have coverage for your Professional Services for Medical Products Sales and Service Personnel. Your field, sales and service
representatives who provide technical expertise, product training and sales support in connection with the sale, loan, lease or delivery of your
products are to be insured. Your medical staff members are to be insured for liability arising from their providing or failing to provide supervisory
or instructional services.
- Is your defense inside or outside the limits of liability? In most cases you should for a policy that offers defense outside your limits, talk to one of
our brokers for more information on this.
- Always be sure of what exclusions are in the policy, for instants you may manufacture a high risk product that is not covered under the policy terms
or may be specifically excluded. Ask our brokers for options on tough products.
- Do you have automatic coverage if you acquire another company, some policies other such coverage usually for the first 90 days of all acquisitions
or newly-formed companies of which you maintain ownership or a majority interest, other than partnerships, joint ventures or limited liability
companies, are automatically covered as policyholders, provided that there is not similar insurance in force.
- If you are a clinical trials company be sure your policy will cover the following, bodily injury and property damage arising out of products
manufactured or distributed by the policyholder for which potential side effects, adverse reactions, contraindications, warnings and/or precautions
were disclosed in clinical trial protocols, consent forms, products package inserts or labeling cleared for marketing by any governmental health
authority or regulatory body.
- Is your policy an Occurrence Policy or a Claims Made Policy? This coverage is one of most importance, and is widely overlooked or
misunderstood by insureds. Products Liability may usually be purchased either on an Occurrence or Claims Made coverage form. As a general
rule, the Occurrence coverage form offers superior protection but it can be significantly more expensive than the Claims Made coverage form.
Occurrence coverage form protects against covered lawsuits as long as the policy is in force when the bodily injury or property damage occurs. As
long as this condition is met, coverage is not jeopardized if the policy is cancelled or non-renewed and if the claim or lawsuit papers are
subsequently filed. Claims Made coverage form however protects against covered lawsuits only when the following two conditions are met: 1) the
policy is in force when the bodily injury or property damage occurs (just like the Occurrence coverage form) AND 2) the policy or a renewal of the
policy is still in force when the claim is made. The second condition makes the Claims Made coverage form much more risky than the Occurrence
coverage form since the Claims Made policy may not be renewed if the insured manufacturer or distributor can´t afford the renewal premium, shuts
down operations, or if renewal terms are not offered by the carrier.
Those manufacturers or distributors that have the Claims Made coverage form and that shut down their operations may elect to buy "tail" coverage which
in effect converts their prior Claims Made policies into an Occurrence policy; however, this can be too expensive for many to afford.
Changing a Claims Made policy from one carrier to a new carrier upon renewal may be a bit tricky because of a provision in a Claims Made policy known
as a "Retroactive Date." It is of critical importance that the "Retroactive Date" is always set to be the first date that the first Claims Made policy was effective.
Even though the Occurrence coverage form is clearly superior for the reasons stated above, many start up operations opt for Claims Made coverage due
to the afford ability issue.
The above descriptions on the topics of Occurrence, Claims Made, bodily injury, property damage, coverage triggers, retroactive dates, and tail coverage
have been greatly simplified for explanation purposes. You should always consult with a business insurance professional before making critical
decisions in these areas.
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