Product liability insurance is a type of insurance policy that offers coverage for legal liabilities arising out of damage or injury caused to a third party due to a product manufactured by the insured business. It covers legal and financial liabilities because of illness, bodily injury or accidental death to a third party or third-party property damage.
Due to rising economic uncertainties, the need for an insurance policy today has become vital. It provides financial assistance to customers under emergency situations. It works no less than a safety blanket, protecting the policyholder from various concerns that may arise. There are various insurance policies available based on the different needs and requirements of the customers.
People commonly purchase heath, travel and life insurance plans, whereas, there are other specific plans available, pertaining to the unique needs of the customers. People, who need coverage for certain specific issues, purchase these optimized insurance plans and Product Liability Insurance is one such specific plan. Check out the details of Product liability insurance in detail below:
A product liability insurance policy would offer coverage against party claims or claims against the company, and not in the name of the person. If a claim is made, then the insurance provider is liable to defend the case of the policyholder i.e. the business production.
Usually, business owners purchase professional liability insurance to secure them against legal and financial risks or troubles that may arise due to negligence, or injury as a result of the using the product manufactured by the insured business. This will safeguard the insured person against legal pay-outs and outlays for which he may be accountable. Remember that contractual liabilities and deliberate destruction would not be given a cover, under the policy.
Product liability Insurance in India was originally ideated by companies or businessmen who experienced a set of similar risks. Thus, this policy was introduced to cover those risks, in order to help each other address those issues.
Product liability insurance policy is paramount for business owners, product manufactures, pharmaceuticals and even hospitals. A product liability insurance policy is usually acquired by enterprises or individuals, who might be held accountable for legal or financial liabilities, apart from other relevant issues.
For instance, a product company has been sued for promoting sales of defective products, causing damage to the user or other products. In such a situation, if the manufacturer has product liability insurance policy handy, then the insurance provider would recompense the consequent legal costs.
This is imperative for companies manufacturing chemical products, pharmaceuticals, tobacco, foods and beverages, entertainment etc. This one is not mandatory but holds relevance for certain industries. If you are one of them, you must not miss out on it.
Based on your profession and business requirements, you can select a product liability insurance plan, available from different insurance providers. A product liability insurance policy usually provides cover for Third-party, Public entities, and Product.
In case, there is any damaged caused to a third person, company or property; then the insurance policy would cover the loss or damage caused by the product. The first party is the policyholder, the insurance provider is the second party, and the victim is the third person or the company who has made the claim against the loss or damage caused by the usage of the product.
Procuring a product liability insurance cover is mandatory only in some countries. But it’s advisable that industries, having an impact on third parties including entertainment, food and beverage industries etc. should buy it, to protect themselves against any unnecessary risk.
The premium for product liability insurance plans is usually higher than other insurance plans, but, in the event of any claims, the premium costs would be lower than the cost of legal troubles. For that reason, buying this insurance policy is imperative too.
Places which are at higher risk include public places like chemical industries, alcohol manufacturers, tobacco, etc. If the nature of your product involves unusual risks, then your insurance provider can also refuse to process your claim. You might have to pay an exorbitant amount to compensate for the loss.
A product liability insurance policy covers the claims arising due to the following reasons:
The policy can be further enhanced with the following benefits:
A product liability policy shall not cover the following claims:
The claim procedure for product liability insurance plans may vary as per the insurance provider.
The premium for a product liability insurance policy depends on the following parameters-
The insurer will not offer compensation under the following circumstances-
No, contractual liabilities are not given a cover under product liability insurance policy.
Yes, you can opt for excess and the percentage will vary from one insurance provider to another.
Yes, you can opt for add-on covers that offer compensation for named and unnamed vendors, countries operating under different laws, etc.
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*Tax benefit is subject to changes in tax laws. *Standard T&C Apply
** Discount is offered by the insurance company as approved by IRDAI for the product under File & Use guidelines