Liability Insurance

Sidebar_image1 Sidebar_image1 Sidebar_image1
1 3 2 4 5 6
Sidebar_image1 Sidebar_image1 Sidebar_image1

Product liability insurance plays an important role in safeguarding the business from various claims which may arise in respect of its products and services. So, what are the duties of Insured under product Liability Insurance?

Though the product liability insurance offers coverage; the policyholder has to discharge some duties under a product liability policy.

Duties are as follows-

  • It is necessary for the policyholder to immediately inform the insurer about any loss or at least within seven days of the loss or claim brought against the insured.
  • It is the responsibility of the policyholder to inform the insurer about events or occurrences which may give rise to claims
  • Without consulting the product liability insurance company, the policyholder should not admit liability, settle or compromise or make any promise with regard to the claim. The insurer can deny claim settlement if you have compromised without consulting the insurance company.
  • It is the duty of the policyholder to inform the product liability insurance company about any expenses incurred in connection with the claim
  • Just informing the insurance company about the claim is not enough if the policyholder doesn’t cooperate with the insurer. It is the duty of the policyholder to cooperate with the product liability insurer if the latter wants to conduct an investigation
  • Because you have product liability insurance, it doesn’t mean you can act carelessly. A product liability insurance safeguards you against loss, however, as the policyholder, it is your duty to take all steps to mitigate risks
  • It’s the policyholder’s duty to cooperate with the insurance company for the recovery of claims from the third-party

Important note-

It is necessary to note; the purpose of a product liability insurance policy is to shield the policyholder against claims that may arise from your products or services. However, in any situation, the policyholder can’t act carelessly or hide material facts from the insurer. In the case of concealment of information, the insurer can refuse to settle the claim.

Read More: Who are covered under Directors & Officers (D&O) Liability Insurance Policy?


Established in 2010, L.J Tractors achieved a big name in the industry in manufacturing tractors, especially for farmers. The company has its stores throughout the country from where it is selling tractors directly to people.

However, last year, the company faced a major brunt when one of its buyers filed a case against it. The user injured himself while changing the tire installed on the tractor. It was a brand-new truck whose tire busted. Though the tractor was fitted with a safety switch, the accident happened and injured the person.

The buyer filed a case against L.J Tractors and asked for compensation for the loss or injury caused to him. In this case, L.J Tractors had product liability insurance which they bought a few years ago to cover such cases.

Read More: What is covered under directors and officers Liability Insurance Policy?

Though product liability insurance company had to pay compensation, L.J Tractors had some duties to discharge which it did successfully=

  • As soon as the claim was brought, L.J Tractors immediately informed the insurer
  • When the other party asked for the compensation, without consulting the insurer, L.J Tractors didn’t settle any claim or offer compensation to the other party
  • As the claim happened due to some technical fault in the tractor, the insurer decided to conduct an investigation. And L.J Tractors fully cooperated with the insurer
  • The insurer found out that the loss didn’t happen because of the fault in L.J Tractors. But, due to errors or mistakes of the third party. It was the tractor company’s duty to cooperate with the insurance company to recover a claim from the third party.

Just because, L.J Tractors has product liability insurance, it doesn’t mean the company can act carelessly. It is the duty of the tractor company to take all steps and measures to mitigate the loss. In case the insurer finds any discrepancy on the part of the tractor company while discharging its duties, the insurance company has all rights to reject the claim.