Product Liability Insurance Explained

20 000 000 during the period of insurance.

Product liability insurance explained. Product liability insurance is designed to assist you when your products cause a third party to sustain personal injury or property damage. Product liability insurance protects your business should a customer incur damages as a result of a fault with the product you have provided them with. In many countries liability insurance is a compulsory form of insurance for those at risk of being sued by third parties for negligence the most usual classes of mandatory policy cover the drivers of motor vehicles vehicle insurance those who offer professional services to the public those who manufacture products that may be harmful constructors and those who offer employment. Claims for products liability will usually be covered up to an aggregate limit meaning all claims arising from products cannot exceed the limit issued e g.

According to one insurance industry group the average jury award in products liability suits in 2012 was 3 439 035 and the median award was 1 503 339 2 with the exception of medical malpractice claims product liability awards far surpassed those granted in all other types of cases. Once claims that arise out of products liability reach that limit the policy will not pay any more claims. Product liability insurance protection against financial loss arising out of the legal liability incurred by an insured because of injury or damage resulting from the use of a covered product or out of the liability incurred by a contractor after a job is completed completed operations cover. Product liability insurance explained.

Examples of product liability claims include the following business activities. What is product liability insurance. Product liability insurance is intended to cover any compensation payable to a third party and your defence costs the se are the reasonable costs incurred while investigating and defending a covered claim including legal fees experts fees and court. When you are in the business of repairing or selling vehicles the implications of such accidents become much greater.

Product liability insurance protects a company against claims or suits arising from the company s products whether they were made by the company or sold by them. This form of insurance covers a manufacturer s or seller s liability for bodily injury or property damage sustained by a third party due to a product s defect or malfunction. A small defect could open you up to massive claims so this cover is vitally important for product manufacturers. Product liability insurance may protect sole traders contractors and small businesses when products they have supplied or manufactured cause harm injure someone or cause property damage.

If you manufacture or supply goods there s always the possibility that your product could cause damage to a third party that could be property or another person.