Duties
The following are the duties of the insured under a product liability policy.
Duty to Cooperate
The insured must cooperate with the insurer during the investigation and settlement of any claims. It includes providing all necessary information and documents and participating in any legal proceedings.
Duty to Notify
The insured must notify the insurer promptly of any potential claims or lawsuits against them. If this is not accomplished, the insurer can refuse to provide coverage.
Duty to Mitigate
The insured must take reasonable steps to mitigate any damages or losses resulting from the use of their products. It may include recalling or repairing defective products, providing warnings, or taking other corrective measures.
Duty to Maintain Records
The insured must maintain accurate and complete records of their products, including manufacturing processes, quality control measures, and customer complaints.
Duty to Comply with Laws and Regulations
The insured must comply with all applicable laws and regulations relating to the manufacture, distribution, and sale of their products.
It is worthwhile to note that these duties may vary depending on the specific policy and the circumstances of each case. Therefore, it is essential for the insured to carefully review their policy and understand their obligations to the insurer to ensure that they are properly protected.
Case Study
ABC Corporation is a manufacturer of medical devices used in hospitals and clinics. The company purchases product liability insurance to protect itself against any claims made by customers who suffer injury or damage while using its products.
The policy provides coverage up to INR 10,00,000 for any single occurrence and INR 20,00,000 in aggregate for all occurrences during the policy period.
To ensure that the company is adequately protected under the policy, ABC Corporation has several duties that it must fulfil. These duties include:
Duty to Provide Accurate Information
ABC Corporation must provide accurate and complete information about its products to the insurance company. It includes information about the design, production, and distribution of its products, as well as any known risks associated with their use.
Duty to Cooperate with the Insurance Company
In the event of a claim, ABC Corporation must cooperate with the insurance company in its investigation and defence of the claim. It includes providing all relevant information and documents related to the claim, as well as allowing the insurance company to inspect the products involved.
Duty to Mitigate Damages
If a claim is made against ABC Corporation, the company must take all reasonable steps to mitigate any damages caused by the claim. It may include recalling or repairing defective products or providing compensation to injured parties.
Duty to Notify the Insurance Company of any Claims
ABC Corporation must promptly notify the insurance company of any claims made against it, even if the claim appears to be frivolous or unfounded. Failure to notify the liability insurance company of a claim could result in the denial of coverage.
Duty to Comply with Policy Terms and Conditions
Finally, ABC Corporation must comply with all of the terms and conditions of its product liability insurance policy. It includes paying premiums on time, notifying the insurance company of any changes in its business operations or products, and complying with any risk management requirements outlined in the policy.
Conclusion
Product liability insurance can provide valuable protection for businesses. However, the insured need to understand their responsibilities under the policy. By fulfilling their duties to notify, cooperate, mitigate damages, and maintain records, the insured can ensure that their claims are covered by liability insurance.
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