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  • > Quick Guide to Product Liability Insurance
  • > Frequently Asked Questions
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The Benefits of Product Liability Insurance

Worldwide Coverage

Product liability insurance offers worldwide protection. It covers legal liabilities arising from judgments and settlements made in any country, thus protecting your business globally.

Defense Cost Cover

Product liability insurance covers the range of expenses occurring because of a defective product. Overseas litigation, covering exports when considering domestic turnover, and handling defense costs are among these elements.

Comprehensive Protection

Product liability insurance addresses various risks associated with your product, leading to potential liabilities. These include any defects in product, packaging defect, improper use of product or wrong user manual.

Affordable Premium

Product liability policy is available at affordable premium. You can customize the cover according to business needs. Choose from various add-ons such as vendor liability cover and technical collaboration liability cover.

Quick Guide to Product Liability Insurance

Product Liability Insurance

Running a business comes with inherent risks. You are responsible for the health of a large product liability insurance quote number of customers. You can face a heavy fine if your product causes unintended bodily injury or property damage to someone.

Most companies invest in customised insurance policies to have protection against such threats. One such policy is Product Liability Insurance. This is just like any other insurance you buy, but it caters to companies' specific risk protection needs. Therefore, let us delve deeper into understanding this insurance policy.

What is Product Liability Insurance?

First, let's get clear on what is Product liability insurance. Specialized insurance protects small businesses from potential financial losses resulting from damage to their consumers. In addition, it protects from third-party claims and legal issues arising from negligence or defects in the product.

If a company sells a product and it hurts someone, that person can sue the company. In insurance, the third-party is the term used for the customer. The first party is the term used for the business. The second party is the policy provider.

The first party can be liable for the losses even when not directly under fault. In certain instances, court may favor customer, even if the harm resulted from their own negligence with the product.

Businesses that manufacture, distribute, or sell physical products are the ideal clients for Product Liability insurance. However, businesses selling virtual or digital products require another insurance called Professional Liability Insurance to cover their losses. These insurances fall under general liability insurance, which covers a wide range of product and service-related risks.

What is the importance of having Product Liability Insurance in India?

Businesses consider product liability insurance India an effective risk management strategy.

  • Selling physical products involves inherent risks that can lead to unforeseen costs for the company. Not all companies are prepared for such pure financial loss in their cash flow.
  • If a company is unprepared to incur such losses, this can result in a massive hole in its expenses. This may impair the functioning of the business because of a lack of capital, which can further increase the losses. Product insurance prepares the organisation to deal with such costs without spending from its pocket.
  • Industries like food, beverages, chemicals, medications, etc., are at higher risk because of the potential for product contaminant.
  • Construction-related businesses can also be prone because of the risky nature of the job.
  • Electricians, plumbers, and other service providers can be liable for property damage or technical negligence.

Hence, Product Liability insurance covers a wide range of businesses. This is also necessary to protect from the loss of goodwill.

Features of Product Liability Insurance

The following features make Product Liability Insurance a critical policy for businesses. Ensure to look for these in your policy to get the best product liability insurance:

  • Defective product damage costs - This is a fundamental feature of policy, which protects against damages caused by the product.
  • Legal defence coverage - This includes court session costs, lawyers' fees, etc. Some the Product Liability Insurance does not cover this feature.
  • Contractual liability coverage - These liabilities include contract-related mishaps such as terms disagreement, product guarantee claims, etc.
  • Worldwide coverage - Some policies provide global coverage. This implies that we will handle claims from around the globe.

Types of Product Liability Insurance Plans

Different types of Product Liability Insurance plans available in the market. You can also request customised plans tailored to your needs.

Occurrence-based plans- These are the plans that cover claims from the time of occurrence of the event. This coverage protects the company if the incident occurs during the policy period. Even if the policy has expired, you can still file the claim.

  • Claim-based coverage: These plans only provide coverage if both incident and filing of claim occur within policy period.
  • Prior acts coverage: These plans include coverage because of incidents that occurred before the purchase of the policy.

Retroactive data coverage- This policy works on a retroactive date. The date indicates the period that offers coverage for physical harm or property destruction.

List of Companies offering Product Liability Insurance Policy

Product liability insurance shields insured from claims of personal injury or property damage arising from products sold or supplied. This coverage is essential for businesses to manage the financial consequences of such claims effectively. The policy covers the entire sum that the company is liable to pay as damages. The protection also covers legal defense cost incurred. Product liability insurance covers liabilities arising from death, injury, or diseases caused by products sold or supplied by insured. It also covers accidental damage to property by such products.

They also offer globally acceptable policy, add-on, and limited vendor liability covers for vendors named in the policy.

Product liability insurance companies that offer the coverage in India include:

  1. New India Assurance Co. Ltd.
  2. HDFC ERGO General Insurance Co. Ltd.
  3. Tata AIG General Insurance Co. Ltd.
  4. National Insurance Co. Ltd.
  5. United India Insurance Co. Ltd.
  6. ICICI Lombard General Insurance Co. Ltd.
  7. Bajaj Allianz General Insurance Co. Ltd.
  8. Reliance General Insurance Co. Ltd.
  9. Oriental Insurance Co. Ltd.
  10. IFFCO Tokio General Insurance Co. Ltd.
  11. SBI General Insurance Co. Ltd.

Product Liability Insurance Premium

The premium for Insurance represents the payment made to obtain coverage for potential losses associated with product-related risks. This amount can vary based on factors. Like type of risk, size of the company's revenue, claims history, pricing models, and addition of extra coverage options.

Comparably, Product Liability Insurance Premium costs more than other policy plans because of more costs associated with the products. Yet, it can be advantageous for company since policy covers a much larger cost for compensation than its premium.

Coverage Under Product Liability Insurance

Coverage includes the aspects of compensation handled by the insurance policy. These factors may vary depending on the needs and nature of the business Product Liability insurance policy.

  • Product defects- Any damages related to manufacturing or product design defects.
  • Bodily injuries- Costs related to the treatment and care of injured consumers.
  • Property damage- Compensation for any property damage because of a product or service.
  • Legal expenses- Costs related to legal defence, attorney fees, court fees, etc. fall in this category.

Product Liability Insurance Limitations

Product Liability insurance does not cover the following:

  • Any virtual harm caused by digital products
  • Employee injuries during the manufacturing or shipping
  • Any general consumer injuries unrelated to the use of the product
  • Any accidents that may occur while shipping or delivering the product
  • Property damages to the company during the manufacturing of the product
  • Product recall costs caused by consumer disappointment
  • Costs of repairing defects or malfunctions
  • Product guarantee costs for providing exchanges or services

Product Liability Insurance Claims Process

Claiming your Product Liability Insurance involves the following steps:

  • Notify the policy holder after the occurrence of the injury/damage. Provide relevant details such as the event's timing, the extent of the damage and the claim's nature.
  • Collect essential documents such as product testing reports, invoices, packaging and manufacturing records, and product sales records. Include any other relevant documents that can provide support for your claim.
  • The policy holder will carry out the required evaluation and investigation. They will offer legal assistance and documentation if the case goes to court.
  • Both parties involved will negotiate a settlement to come to a conclusion. The policy will provide the financial assistance involved in the settlement of the claim.

Remember that these are basic guidelines. Actual steps may differ according to the policy you choose.

Frequently Asked Questions

Product liability insurance coverage is essential. It protects the insured from legal claims because of property damage or injuries caused by their products to third parties. A product liability insurance acts as a backbone, countering unnecessary costs, including legal expenses, arising from third-party liabilities
Suppose your company sells beverages and because of negligence or contaminant in the product, many consumers get food poisoning. This is where your product liability or product indemnity insurance would come in. It would aid all the financial costs of treating the affected consumers and any legal charges involved.
Contractual liabilities are the risks associated with signing a contract with another company. Product Liability Insurance does not cover these liabilities related to non-performance and contract obligations. It only covers physical and legal damage to a third party caused by a product.


What are the duties of Insured under product Liability Insurance?

A product liability insurance plays an important role by safeguarding the business from various claims which may arise in respect of its products and services. Though the product liability insurance offers coverage; the policyholder has to discharge some duties under the policy as the following...
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What is Product Liability Insurance?

A product liability insurance is a policy which indemnifies the distributor, wholesaler and retailer against various losses or damages which could arise out of the consumption or use of products manufactured, sold or distributed by them.

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Does principle of subrogation apply to Product Liability insurance? How?

Yes, the principle of subrogation applies in the case of product liability insurance as well. If a product liability insurance company settles the claim, the insurer shall be subrogated to all of the policyholder’s rights of recovering the claim amount if the loss or damage happens due to the fault of the...
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Quick Turnaround

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Strong Claims Support

We manage all aspects of your claim - from preparing documentation to follow-up with the insurer.

Value-Added Services

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