Product Liability Insurance

What is Product Liability Insurance?

Product liability insurance is designed to protect businesses from financial losses due to claims or lawsuits that arise from issues with their products. If a product causes harm, injury, or damage to a person or property, this insurance helps cover the associated legal fees, medical bills, and compensation.

Why do You Need Product Liability Insurance in India?

Problem

In India, businesses that manufacture, distribute, or sell products are at risk of facing legal claims if their products cause injury or damage. As consumer awareness grows, any flaw in a product's design, manufacturing, or labelling can lead to expensive legal battles. This is especially critical in industries such as electronics, food and beverages, pharmaceuticals, and consumer goods, where the stakes are high. Without proper protection, these legal claims can lead to significant financial strain, potentially threatening the survival of the business.

Solution

Product liability insurance provides crucial protection for businesses against such risks. It covers the costs associated with legal defense, settlements, and compensation in cases where products are found to be defective. By securing this liability insurance, businesses can safeguard their financial health and continue operations without the threat of unexpected legal expenses. Additionally, having product liability insurance can enhance customer confidence, as it demonstrates a commitment to addressing any issues that may arise with their products.

Who Should Consider Product Liability Insurance?

Product liability insurance is vital for businesses that manufacture, distribute, or sell products. Here are the types of businesses that need product liability insurance:

1. Manufacturers: Businesses that create products, including components, should have this insurance to cover potential liabilities from defective products that cause harm.
2. Wholesalers and Distributors: The companies responsible for distributing products may face liability if the products they handle are defective and cause damage or injury.
3. Retailers: Retail businesses, whether physical or online, can be held liable for selling defective products, especially if the manufacturer is inaccessible or located outside the country. Hence, they should also consider having product liability insurance.
4. Importers: Companies importing products from abroad may be considered responsible for any harm caused by those products, making insurance coverage crucial.
5. E-commerce Sellers: With e-commerce's growing popularity, online sellers and platforms can also be at risk of product liability claims. Hence, it becomes extremely crucial for them to have a comprehensive product liability insurance policy.

What Does Product Liability Insurance Cover?

Product liability insurance provides coverage for various expenses and damages resulting from issues with your product. This includes:

• Legal Costs: Covers the expenses associated with defending against lawsuits.
• Medical Expenses: Pays for medical costs related to third-party injuries caused by the product.
• Compensatory Damages: Provides compensation for harm or loss incurred by third parties.

• Property Damage: Compensation for damage caused to someone else’s property by the product.
• Illness: Medical expenses related to illnesses caused by the product.
• Wrongful Death: Compensation for claims resulting from a death caused by the product.

Product Liability Insurance Add-Ons

• Worldwide coverage extensions
• Contractual liability extension
• Additional insured extension
• Completed operations extension
• Recall expense extension
• Government recall extension
• Loss mitigation extension
• R&D extension
• Technical collaborator

Exclusions Under Product Liability Insurance

The exclusions under product liability insurance are as follows:

• Expenses related to product recalls
• Intentional, deliberate, or willful non-compliance with statutory requirements
• Losses that are purely financial in nature
• Costs related to fines, penalties, and punitive or exemplary damages
• War invasion and allied perils
• Consequential loss of any kind
• Unlawful personal gain
• Biological or chemical contamination caused by or resulting from an act of terrorism
• Acts of dishonesty

Note: Please refer to the policy wording for detailed coverage, exclusions, and conditions.

How to File a Claim for Product Liability Insurance?

You can follow the steps mentioned below to file a claim for product liability insurance:

1. Notify Your Relationship Manager: Immediately inform your relationship manager about the incident to initiate the claim process.
2. Complete and Submit Claim Forms: Fill out the necessary claim forms and submit them to your relationship manager to officially start your claim.
3. Evaluation and Claim Registration: The insurance company will evaluate your claim and register it, providing you with a unique claim reference number.
4. Appointment of Surveyor: The insurer will appoint a surveyor to assess the damages and verify the claim.
5. Documentation Submission: The surveyor will guide you on the required documents. Ensure timely submission of all necessary paperwork for smooth claim processing.
6. Claim Approval and Funds Disbursement: Once the evaluation is complete and your claim is approved, the insurance company will release the funds to resolve the issue.

Note: The final decision to approve or deny the claim rests with the insurer. Additionally, any involvement with legal representatives or handling of legal documents related to the claim must be pre-approved by the insurer.

Why Buy a Product Liability Insurance Policy Through Policybazaar for Business?

• Dedicated Relationship Manager: From the very start, you will be assigned a dedicated relationship manager who will provide personalised support, ensuring your business is well-protected against potential product liability-related risks.
  
  
• 365-Day Claims Support: Our claims specialists are available year-round, facilitating the prompt and efficient processing of your claims whenever you need assistance.
  
  
• Expert Advisory Services: Our seasoned business risk consultants deliver tailored guidance, addressing your unique requirements and helping you manage complex challenges with confidence.
  
  
• Competitive Pricing: Leveraging our extensive network of insurer partners, we negotiate competitive rates to ensure you receive the most favorable pricing without compromising on service quality.