Product Liability, Recall, Financial Loss and Product Guarantee
from Zoom Insurance
Physical product manufacturing is fraught with risk both from efficacy as well as defects in manufacturing. Despite leaps and bounds in technology processes and the skill of manufacturing entities, there is an inherent risk in producing defective products. Defective products sometimes cause a bodily injury or death to the consumers which results in a credibility loss for the manufacturer apart from a financial loss towards the settlement of such cases. The Industrial sector has had its fair share of such cases ranging from garment industries, automotive assemblers, Auto Component manufacturers, Food-related industries, Pharmaceutical Industries, etc. Moreover, considering that the distribution network and product usage of Indian manufacturers products are globally present the risk assumes a different proportion as in such case the manufacturing entity is bound by the laws of each of the countries where such a distribution network exists and products are consumed.
Even if the defects are discovered during batch tests etc. and a proactive recall is initiated to avoid the situation outlined above a tremendous expense would be incurred by the entity.
In such cases a product liability policy which extends to cover Recall expenses, financial loss and product guarantee assumes significance.
Scope of our services
Product Liability (PL) Insurance covers against property damage and bodily injury or death that results on account of consumption of the product of the Insured entity. There are generally two kinds of product liability policies, a claim- made policy which covers claims regardless of the period of the event subject to being with the retroactive date and the other is an occurrence policy where coverage can be claimed only during the policy period defined. Excess liability coverage can be bought to cover claims that exceed PL policy. Companies can also add companies and individuals into their CGL policies for additional insured coverage that are contributory to the manufacturing of the product or distribution. A business must choose wisely between claim- made policy and occurrence policy. Apart from these risks, a PL policy can also extend to cover a host of physical risks that third parties may incur such as product recall, financial loss and product guarantee.
