Product Liability Insurance
Product liability insurance definition: “Product liability insurance is defined as the part of general insurance system of risk financing against all claims making the insured as legitimate payee if any type of body injury happens accidentally, illness or else accidental damage to the property of third party due to misuse, use, consumption or handling of insured products or goods”.
Who should ask for Product liability insurance: Altogether eternal links existing in the commerce activities are in need of this type of insurance cover. Although business houses or organizations involved in manufacturing, supplying, vending and exporting have additional necessity of Product liability insurance as they are part of the supply of chain and does have additional risk of product liability claims. Read about third party liability insurance.
Claims associated with Product Liability
Studies in this sector of insurance have revealed that so far there are certain types of product liability claims arising out of “Substantial” or “Questionable” defects in product manufacturing, designing, labeling, warning, warranties and packaging. Apart from this, some of the few causes may arise due to the activities involved like storing, transporting and handling of finished products. Awareness of product manufacturing, quality and finishing is most important when someone is involved in product manufacturing, marketing and sales. We cannot deny that although some products are manufactured for specific use they are deliberately used for other purposes giving rise to misuse of the products for which they were actually not intended. In some of the jurisdictions, this deliberate and forced misuse of many products can lead to product liability claims.
- Most of the product liability claims are due to the manufacturing defects that occur at the manufacturing units due to slight negligence and sometimes may be normal in appearance but are threatening for health and body of consumers.
- Secondly, product liability claims happen due to the defected design that can cause any type of damage to consumers, which can be either repairable or sometimes irreparable.
- Due to any reasons defect in the labels containing instructions, descriptions and other required material does have defects it can be harmful for consumers to understand usage and other things related to products raising chances of product liability claims.
Damages awarded in Product Liability Claims
Often claims that go against the production houses has to cover and award claims that consists of medical bills, damages to properties if any, economic damages and in rare instances insured also has to pay for the attorney fees as well costs and punition damages. In addition, insurer also has to be ready for the long and costly legal battles for some of the claims that can be won in court.
How much to cover and what should be the premium?
Actually, the cover for product liability insurance depends on mutual understanding of the insurance company and manufacturer although there are no limits as such, about what should be the minimum cover to be implied in these types of insurances.
In most of the instances premium for the insured amount depends on various elements that include sales volume, type of finished product, and the role of the insured business organization.
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