Free Consultation

Product Liability Insurance

Product Liability Insurance shields businesses from financial consequences of claims related to damage or injury caused by their products.

Coverage worth

₹50 Lakhs

at just

₹7,500^*

annually

Get Product Liability Insurance in Minutes

Insurance Expert

Free Consultation

50+ years of collective insurance experience

₹5,000 Cr+ of cumulative risks insured

What Is

Product Liability Insurance?

Product Liability Insurance covers a spectrum of risks that your products might encounter. These could range from manufacturing defects, design flaws, or inadequate warning labels to misuse by consumers. If someone files a claim against your business because of an issue with your product then this policy can cover legal defense costs, settlements, and court judgments.

Product Liability Insurance provides a shield of protection for your business reputation as well. In a time when news travels fast and a single negative incident can severely harm your business image, having a policy that promptly addresses issues and compensates those affected can be a major asset.

Without product liability insurance, one significant claim could mean the end of the business you've worked so hard to build. With this policy, you can continue your operations, innovate, and expand your product line with the confidence that you're safeguarded against unforeseen liabilities.

Features of Product Liability Insurance:

Works on Claims-Made Basis

Claims need to be initiated within the policy period. The incident triggering the claim must also happen within the policy’s coverage duration.

Retroactive Date

Your first policy’s start date is carried forward to subsequent policy renewals. Hence, you can initiate claims for incidents that occur post your first policy’s start date assuming that continuous coverage is maintained

Insurance Period:

The insurance period spans from the retroactive date to the policy's termination date, providing coverage during this entire timeframe.

Who Needs

Product Liability Insurance?

Businesses involved in manufacturing or selling goods, as well as distributors, importers, retailers, and others interacting with products, require product liability insurance. Clients may also need this policy to safeguard against design flaws and other risks associated with the product. This insurance protects your business from claims or lawsuits resulting from bodily harm or property damage caused to any third party by defective items that your business has manufactured, distributed, or sold.

Product Liability Insurance is necessary for various kinds of businesses:

Manufacturers

Distributors

Retailers

Online sellers

Pet supply shops

Restaurants, cloud kitchens

Print shops

Why Get

Product Liability Insurance?

Introduction of Consumer Protection Act 2019 has brought significant changes to the product liability landscape in India. It includes a dedicated chapter dealing with product liability, expanding the scope of liability across the supply chain to include manufacturers, product sellers, and product service providers. This means businesses at various points in the supply chain could face liability claims, making product liability insurance all the more critical.

Even with the utmost dedication and care put into crafting your products, they may still fall short of customer expectations. You need product liability insurance because, in case of a lawsuit, it covers legal defense costs and potential damages. Plus, it aids in covering repair or replacement expenses for defective products—even if you aren't sued. There can be design flaws, product defects, poor instructions, labels, or warnings that cause physical harm or damage to the user.

Scope of coverage under product liability insurance

Incidents covered: The policy provides coverage for accidents, injuries, and damages resulting from the use of the product.
Potential product issues: Coverage may include manufacturing defects, improper packaging, usage instructions, and delivery specifications.
Domestic and export sales: Certain policies offer protection for both domestic sales and exports by the insured company.
Claim notification: To initiate the claim process, claims must be submitted to the insurer as soon as possible.

Coverages & Exclusions in

Product Liability Insurance

CoveragesExclusions

This insurance protects your business from claims or lawsuits resulting from bodily harm or property damage caused by defective items that your business has manufactured, distributed, or sold. A product liability insurance policy addresses claims due to:

Product injury

It covers attorney fees and court-ordered settlements or judgment costs. This includes design flaws, manufacturing flaws, warning or use flaws, and damages and injuries stemming from proper product use.

Product-related property damage

It protects your business in case a product you sell or manufacture damages a customer's property, whether due to product defects or instruction manual errors.

Product-related illness

It covers illnesses caused by products sold or manufactured by your business, such as expired food or allergy-inducing beauty products.

Products causing wrongful death

It addresses lawsuits, burial expenses, and other costs associated with customer death resulting from your product.

Product Liability Insurance covers the following costs related to the aforementioned claims:

Legal representation costs

These include defense costs for providing documentation or information to investigators concerning product-related faults.

Public relations costs

It reimburses expenses for managing and mitigating negative company reputation due to product-related allegations.

Court attendance costs

It offers protection for reasonable costs and expenses incurred by attending court proceedings, hearings, trials, and depositions related to product-related claim defense.

Crisis communication costs

It covers costs for hiring public relations or crisis management firms to advise on public communication strategies related to product claims, lawsuits, or allegations.

Product guarantees

Insurance coverage will be inapplicable if the policyholder makes explicit warranties or guarantees to customers concerning the performance or quality of the products being sold. In the event that such products fail to meet the stated standards, resulting in a damages claim, the insurance policy will not provide coverage.

Repairing/Refurbishing costs

In the event that the insured's product causes harm or damages someone's property as a result of its defect, the insurance policy may cover the costs of compensating the affected party. However, the policy typically will not cover the cost of repairing or refurbishing the defective product itself.

Financial losses from loss of market share/goodwill

This exclusion applies to losses that may arise from a decrease in the insured's market share or loss of goodwill due to the harm caused by their product. These types of losses are typically not covered because they are considered to be indirect or consequential damages, rather than direct damages caused by the defective product itself.

Willful manufacturing/distributing of defective/dangerous products

If an insured engages in any willful or intentional misconduct, the insurance policy will not provide coverage for any resulting losses, including those that arise from claims of bodily injury, property damage, or other harm caused by the defective or dangerous product.

Employee injuries sustained while manufacturing the product

Employees of the insured are not covered under this policy for injuries sustained while manufacturing the product. The rationale behind this exclusion is that employees injured while manufacturing a product are typically covered by a separate policy named the workers' compensation insurance policy.

Technology product claims

This policy excludes coverage for certain types of losses that may arise from technology products. It may apply to losses resulting from claims of intellectual property infringement, failure of technology products to meet performance specifications, or failure to perform as intended. The rationale behind this exclusion is that in general, technology products are more complex than other types of products and are subject to a higher degree of risk due to their reliance on software, hardware, and other advanced technologies.

Product Liability Insurance Claims Example

Incident 1Incident 2

Bodily Injury Caused by Defective Healthcare Product

Incident

An Indian pharmaceutical company supplied products overseas, which were found to have impurities above the acceptable level, causing bodily injury. Primary Concern: A design defect in the insured's product led to bodily injury.

Resolution

The insurer managed defense proceedings in the USA, appointing lawyers and experts through its global network to build a strong defense, resulting in a significant reduction of claimed damages.

About Product Liability Insurance

What is the jurisdiction and territory of coverage in product liability insurance?

Are product recall costs covered under product liability insurance?

What are the most common types of product liability cases?

How can a business reduce the risk of product liability claims?

Can a retailer be sued for product liability?

Can you be sued for reselling products?

What are the essential elements of a product liability lawsuit?

What are five common product defects covered by product liability insurance?

What are typical software product liability claims?

Who can be held liable in a product liability case?

What is a breach of warranty in product liability?

How do you calculate the liability for a product warranty?

Are there any limits to product liability?

What are the four elements required to prove negligence in a product liability action?

In a product liability claim, who is held liable - the manufacturer or the seller?

Business Protection for SMEs & Startups

Get Business Insurance in Minutes

Schedule a call

Say hello to a spam-free zone! We respect your privacy and
won't bombard you with unwanted calls.

Free Consultation

Backed by The Best

Indore-based BimaKavach caters to the Business Insurance needs of Small & Medium Enterprises

View Article

This is an article by YouStory written by Palak Agarwal and published on October, 2022

How do you get started?

Schedule a consultation to see how BimaKavach can reduce your risk.

Schedule a call

Say hello to a spam-free zone! We respect your privacy, and we won't bombard you with unwanted calls.

Free Consultation

Subscribe to our Newsletter

Our Products

Disclaimer:

BimaKavach Insurance Broking Pvt. Ltd. | CIN- U66010MP2022PTC059393 | Registered Office- Flat No 201, Classic Avenue, 184 Shrinagar Main, Indore Madhya Pradesh India- 452018 | Phone No.- 9036554785 | Email- support@bimakavach.com

BimaKavach is registered as a Direct Broker | Registration No. 901, Registration Code No. IRDAI / DB 985/ 2022, Valid till 25/06/2026, License category- Direct Broker (General).

Visitors are being informed that BimaKavach Insurance Broking Pvt. Ltd. holds the right to share the information submitted by you on the website with Insurers. Product information is genuine and exclusively based on information obtained from insurers.