Product liability insurance refers to the insurance against third party liabilities as a result of death or injuries caused by the products that were sold to them. It is a form of commercial general liability. This policy reimburses the insured all the money that he has to pay to the third party if a product sold to the third party has caused accidental injury or death or disease or any damage to his property. This can happen if there are any manufacturing defects. The product liability insurance gives cover in such cases when the product has been sold to the customer and it has left the premises of the seller or insurer. The premium for the product liability insurance depends on the type of the products being manufactured. Products are classified according to risk group, ratio of a single limit of accident to a single limit of a year and turnover. A compulsory excess clause under this policy makes the insurer liable to pay 0.5-1% of the maximum limit of coverage.
The product liability insurance excludes certain conditions while providing cover: product recall, if there is any non-compliance of international statutory provision which is deliberate and wilful, when there is loss of willingness or loss of market position, penalties, fines, standard or disciplinary charges, under war like conditions and any loss which might have occurred before the retroactive date which is stated in the policy documents. There are provisions to insure exports to Canada, US, Europe and other foreign countries under the product liability insurance guarantee. The policy is subjected to extension to vendor liability. Another extension that is possible is the liability resulting from any agreement in the form of technical collaboration.
The product liability insurance covers you against any unexpected outcomes of production defects, flaws in design or faulty warning provided along with the product. The damages that are covered include medical expenses, compensation to the third party, economic loss and also sometimes fees to be paid to the attorney and special fines. If you are the owner of a company which supplies goods to the consumers then it needs product liability insurance. You should also get a clear idea of which areas are being covered under the policy to avoid major financial losses. Another point that is to be kept in mind is that a smooth claim settlement process requires you to report any information accurately.
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Product liability insurance: protects you against third part