Product liability insurance provides coverage for manufacturers, marketers, distributors, wholesalers, retailers, and traders against legal costs for third-party bodily injury or property damage arising from the use or consumption of products they manufacture, sell, handle, distribute, or dispose of.

Coverage

This policy covers all amounts (including defense costs) that the insured is legally obligated to pay as damages due to:

  • Accidental death, bodily injury, or disease to any third party.
  • Accidental damage to third-party property.
  • Defects in the product, which may include manufacturing flaws, faulty packaging, incorrect delivery specifications, or inadequate instructions regarding the product’s use.
  • Improper use of the product by consumers due to missing or incorrect labeling, warnings, or inaccurate representations about the product’s fitness, quality, durability, performance, or use.
    The policy also covers the company’s total sales turnover, including both domestic and export sales.

Additionally, the policy includes a retroactive date, meaning it covers claims resulting from incidents occurring before the current policy period, as stated in the claims-made liability policy declaration.

Key Benefits

This insurance helps product manufacturers address legal responsibilities and third-party liabilities arising from accidents, ensuring compensation for any damage or bodily injury caused to third parties.

Add-On Covers

  • Global Extension: The policy can be extended to cover liabilities arising from judgments or settlements made in any country worldwide.
  • Limited Vendor’s Liability Extension: Provides coverage for liability arising from the sale and distribution of insured products by vendors, provided these products come with original warranties and usage instructions as specified by the manufacturers.

Exclusions

The policy does not cover:

  • Liability for product recalls.
  • Liability for product guarantees.
  • Pure financial losses, such as loss of goodwill or market share.
  • Costs incurred for repairing, reconditioning, or modifying defective product parts.

Claim Process

In the event of a loss, the following actions must be taken immediately:

  1. Notify the insurer of the loss, provide a full written statement of the claim, including the nature, extent, and estimated loss. Delays in notification may risk the insurer denying liability.
  2. Take all necessary steps to minimize the extent of the loss, damage, and liability.
  3. Determine the proximate cause of the loss, assess its type and extent, and confirm whether it falls within the policy’s coverage.
  4. Fully cooperate with the insurer and the appointed surveyor to complete the survey and accurately assess the loss.
  5. Provide all records and evidence required by the surveyor or insurer to determine the extent of the loss and liability under the policy.
  6. Submit necessary documents, including the claim form, copy of the policy, notice of claim, demand letter, and incident report.