Product Liability Insurance

What Does Product Liability Insurance Cover?

Product liability insurance provides coverage for various expenses and damages resulting from issues with your product. This includes:

• Legal Costs: Covers the expenses associated with defending against lawsuits.
• Medical Expenses: Pays for medical costs related to third-party injuries caused by the product.
• Compensatory Damages: Provides compensation for harm or loss incurred by third parties.
• Property Damage: Compensation for damage caused to someone else’s property by the product.
• Illness: Medical expenses related to illnesses caused by the product.
• Wrongful Death: Compensation for claims resulting from a death caused by the product.

Product Liability Insurance Add-Ons 

• Worldwide coverage extensions 
• Contractual liability extension 
• Additional insured extension
• Completed operations extension 
• Recall expense extension
• Government recall extension 
• Loss mitigation extension 
• R&D extension 
• Technical collaborator

Exclusions Under Product Liability Insurance

The exclusions under product liability insurance are as follows:

• Expenses related to product recalls
• Intentional, deliberate, or willful non-compliance with statutory requirements
• Losses that are purely financial in nature
• Costs related to fines, penalties, and punitive or exemplary damages
• War invasion and allied perils 
• Consequential loss of any kind 
• Unlawful personal gain
• Biological or chemical contamination caused by or resulting from an act of terrorism
• Acts of dishonesty 

Note: Please refer to the policy wording for detailed coverage, exclusions, and conditions.

How to File a Claim for Product Liability Insurance?

You can follow the steps mentioned below to file a claim for product liability insurance:

1. Notify Your Relationship Manager: Immediately inform your relationship manager about the incident to initiate the claim process.
2. Complete and Submit Claim Forms: Fill out the necessary claim forms and submit them to your relationship manager to officially start your claim.
3. Evaluation and Claim Registration: The insurance company will evaluate your claim and register it, providing you with a unique claim reference number.
4. Appointment of Surveyor: The insurer will appoint a surveyor to assess the damages and verify the claim.
5. Documentation Submission: The surveyor will guide you on the required documents. Ensure timely submission of all necessary paperwork for smooth claim processing.
6. Claim Approval and Funds Disbursement: Once the evaluation is complete and your claim is approved, the insurance company will release the funds to resolve the issue.

Note: The final decision to approve or deny the claim rests with the insurer. Additionally, any involvement with legal representatives or handling of legal documents related to the claim must be pre-approved by the insurer.

Why Businesses Need Product Liability Insurance in India?

Product liability risks are no longer limited to large manufacturers. In India’s evolving consumer and regulatory landscape, any business involved in manufacturing, distributing, or selling products can be held legally responsible if a product causes bodily injury, property damage, or financial loss. Several factors make product liability insurance a critical safeguard for businesses operating in India are:

1. Rising Consumer Awareness and Legal Accountability

With greater consumer awareness and stronger enforcement of laws such as the Consumer Protection Act, 2019, businesses face increased exposure to lawsuits related to product defects, inadequate warnings, or design flaws. Even unintentional defects can trigger costly legal action.

2. Protection Against Legal and Compensation Costs

Product liability claims can involve high legal expenses, compensation payouts, and settlement costs. This insurance ensures that such financial burdens do not disrupt business operations or strain cash flows.

3. Coverage Across the Product Lifecycle

Risks may arise at any stage, from manufacturing and packaging to storage, distribution, and sale. Product Liability Insurance provides coverage across this entire lifecycle, safeguarding businesses against unexpected claims.

4. Supports Business Continuity and Credibility

Having adequate product liability cover demonstrates a commitment to quality, safety, and accountability. It enhances trust among customers, distributors, and business partners while supporting long-term stability.

5. Essential for Manufacturers, Importers, and Sellers

Whether operating as a manufacturer, importer, wholesaler, or retailer, liability exposure exists once a product enters the market. Insurance acts as a critical safety net against claims that could otherwise threaten the business's survival.

Who Should Consider Product Liability Insurance?

Product liability insurance is vital for businesses that manufacture, distribute, or sell products. Here are the types of businesses that need product liability insurance:

1. Manufacturers: Businesses that create products, including components, should have this insurance to cover potential liabilities from defective products that cause harm.
2. Wholesalers and Distributors: The companies responsible for distributing products may face liability if the products they handle are defective and cause damage or injury.
3. Retailers: Retail businesses, whether physical or online, can be held liable for selling defective products, especially if the manufacturer is inaccessible or located outside the country. Hence, they should also consider having product liability insurance.
4. Importers: Companies importing products from abroad may be considered responsible for any harm caused by those products, making insurance coverage crucial.
5. E-commerce Sellers: With e-commerce's growing popularity, online sellers and platforms can also be at risk of product liability claims. Hence, it becomes extremely crucial for them to have a comprehensive product liability insurance policy.

Why Buy a Product Liability Insurance Policy Through Policybazaar for Business?

• Dedicated Relationship Manager: From the very start, you will be assigned a dedicated relationship manager who will provide personalised support, ensuring your business is well-protected against potential product liability-related risks.
• 365-Day Claims Support: Our claims specialists are available year-round, facilitating the prompt and efficient processing of your claims whenever you need assistance.
• Expert Advisory Services: Our seasoned business risk consultants deliver tailored guidance, addressing your unique requirements and helping you manage complex challenges with confidence.
• Competitive Pricing: Leveraging our extensive network of insurer partners, we negotiate competitive rates to ensure you receive the most favourable pricing without compromising on service quality.