If I start a company with a new product can I get my product insured for any quality issue?
If as a business owner you develop a product and someone uses your product and faces
some problem or a medical issue, you can be legally sued for selling a wrong product. What you can do is to opt for product liability will safeguard you against any such lawsuits filed against your or your business.
Product liability insurance offers protection to distributors, manufacturers, retailers and wholesalers, against any legal liability arising out third party injury or damage to property which is caused by the consumption or use of the product sold or supplied. This insurance policy helps to protect a business against a legal issue and covers the expenses involved in the same.
Any product can be insured under product liability insurance. The liability may arise out of factors such as:
Product defect which causes injury, loss, harm or damage to a third party or his/her property
Packaging defect which compromises the safety of the product and causes harm to the third party.
Improper use of the product, absence of warning labels/ precautions, etc. which affects the performance or quality of the product.
The product liability insurance covers any legal liabilities to third party arising out of injury or harm due to a product sold by a business. It covers the following:
Bodily injury, illness or accidental death to a third party
Accidental damage to third party property.
The product liability insurance covers any legal liabilities to third party arising out of injury or harm due to a product sold by a business.
Add on Cover
This policy can also be extended to cover vendors. The add-on cover is called Limited Vendor’s Liability. You can get cover for liability arising out of sales and distribution of the insured product by named or unnamed vendors.
This policy can be availed by product manufacturers, distributors, retailers and wholesalers. This is regardless of the fact whether the product that is insured is the final product or just a part of the final product. Some insurers also extend this policy to the Export Community, which is legally bound to take Product Liability Insurance.
Limit of Indemnity
Under the product liability policy, the “Limit of Indemnity” stands for the sum insured. This amount is determined based on two limits which are set for each accident that occurs during a particular policy period. These are- the Any One Accident (AOA) Limit and the Any One Year (AOY) Limit. The Any One Accident (AOA) Limit is the maximum sum payable for an accident, based on the nature of the product insured, the number of people affected, the type of damage, etc.
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