Why Product Liability Coverage is a Must for Product Manufacturing and Sales


Product liability negligence can be very serious if a claim is made and your business is involved. Businesses that manufacture or sell products have risks that must have a defense to product liability claims making a products liability insurance policy necessary. The product liability policy has some limits of coverage.

The insurers limit their interventions to a certain amount per claim per year In addition; they encourage the entrepreneur to set up a prevention policy which is as effective as possible.

However, unlike other insurance policies for which the guarantee applies to claims that were between the date of inception of the contract and the date of termination, the product liability insurance may be applicable outside of this contract period too; provided of course that the insured has signed the two extensions specific for this type of contract.

These extensions are as follows:

  • A clause that focuses on “recovery of the past” that can take care of damage to products manufactured or delivered prior to the date of effect. The claim of the victim is made under contract;
  • And “subsequent” guarantee, which requires the insurer to support events that occur after the termination of the contract.

Product liability insurance covers damages to third parties. The liability insurance protects the insured against the claims made against him by third parties seeking his responsibility towards victims to obtain compensation for the damage caused to them.

Product liability insurance provides corporate responsibility after a cause of action for negligence, omission or negligence in the performance of products.

This liability insurance also covers expenses incurred by the insured for its own defense and or the company.

Products liability refers to the liability for damages against the manufacturer. This is for damages arising out of the end-users due to a defective product. It is in the Product Liability Act of most countries. The Defendant must be a manufacturer within the meaning of product liability law. A company needs to be considered valid as a manufacturer for the purposes of the Act.

The manufacturer is initially the one who makes the final product, but he is also a manufacturer of components within the scope. Another important aspect of product liability insurance is marketing. The starting point for the liability of the manufacturer is the fact that he has brought the defective product into circulation.

The Product Liability Act excludes the liability of the manufacturer, if he did not put the product into circulation.

The product liability claim of the injured needs to be made within three years after the victim becomes aware of the damage and the person liable must have the knowledge or should have become aware of the damages. Your product liability insurance can cover this claim. It is inhibited by negotiations between the parties.

Even someone who is not the actual manufacturer of a product must follow the liability concerns. For example, a party can pose as the manufacturer by affixing their name, trademark or other distinctive marks.

Here, the presence or application of a brand name or a trademark on the product is not absolutely necessary. Overall, this insurance policy can be of great help to you and when needed, it can help you save a lot of money.

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