No, a standard auto-manufacturer insurance policy does not cover the automobile component sold before insurance was bought. The product liability and product recall policy will trigger claims occurred and reported during the policy term period. The retroactive date plays the key role in claim settlement under auto manufacturers liability insurance cover. A retrospective date is a date when your insurance coverage begins and all the claims occurred on or after this date will be cover under the policy. For example, A policy purchased on 1 January 2017 to 31 December 2017 will trigger claims arising within the policy tenure of 2017 because of a manufacturing defect or design defect or any wrongdoing.
All the claims occurred before retroactive date will not be covered under auto manufacturer insurance. But there are a few product liability insurance companies in India which provide full prior-act coverage. Full prior act coverage defines the coverage of all claims reported during the policy term period, irrespective of the occurrence of the event provided the insured should not be aware of the issue prior to policy issuance.
Full prior act coverage is a valuable addition to the policy since it covers prior events which are reported or bring into notice during the policy duration. But if the insured is aware of the issue prior to the policy issuance, such claim case will get rejected under the product liability insurance. Hence, retroactive date eliminates the risk of coverage of known claims which occurred before the purchase of the policy.
Case Study: A.V. auto-manufacturers bought an auto-component manufacturer insurance policy in 2017. The firm renewed its policy next year i.e. 2018. A claim has been registered by a client against the non-performance of the product which was sold by the company in 2017. Since the auto-manufacturer has renewed its auto-component manufacturer insurance policy timely and the product was sold within the tenure of policy term period. The claim will be covered under product liability coverage under auto-component manufacturer policy.
The product liability coverage of policy offered protection to the firm against the litigation and settlement cost. The firm has saved itself from financial trouble which would otherwise have been wiped off in order to deal with the lawsuit and compensation expenses.
It is equally important to renew your policy on time in order to continue the policy coverage for a long tenure.
Auto-manufacturer should always buy the product liability cover and product recall cover at the very starting of their business operations i.e. prior to the designing part of the product in order to get full coverage against lawsuit claims since the insurance company will study the claim details carefully in order to ascertain when the insured become aware of the issue.
Product liability policy is a claims-made policy and it plays the very important role in manufacturing units as it is a crisis management plan to tackle client-related lawsuits and reputational damage. The product liability policy covers financial losses which incurred due to a defective product. Get your auto-manufacturer business operations covered with product liability and product recall insurance in order to protect yourself from product-related lawsuits. Instil a sense of security in your business operation with auto-manufacturer liability insurance policy.