How Product Liability Insurance is Beneficial for a laboratory?

How Product Liability Insurance is Beneficial for a laboratory?
Product Liability Insurance

This policy comes handy when any negligence on the part of the lab leads to death / injury or loss / damage of property or loss of economic value to a third party. For example, a defect in a product manufactured by the lab may have led to the said death / injury or loss / damage, culminating in a liability for the lab. However, the death / injury or loss / damage should have occurred after the product left the lab premises. Even the expenses incurred by the lab in defending itself against the claim are reimbursed by the insurer subject to certain riders. The lab should obtain the insurer’s permission before undertaking the defence exercise. If the policy has been in force all the time (without any break / interruption caused by any delay in renewal), even claims relating to a previous period (after the policy first came into force), can be preferred in a subsequent period.

Computing the sum insured

  • The sum insured, called the limit of indemnity, is defined for each accident (called any one accident limit or AOA) and for each policy period (called any one year limit or AOY)
  • The AOA limits are computed in a worst case scenario on the basis of number of people that could be affected and the damage that could occur to property.

Features of the policy

  1. The cover is available even if the death / injury or loss / damage is triggered by faulty packaging or faulty delivery specifications or faulty instructions as to the use of the product.
  2. Domestic as well as export turnover is covered
  3. The policy does not cover any liability attributable to product recall, product guarantee, loss of goodwill and loss of market.
  4. The policy does not cover the cost incurred for repairing or reconditioning or modifying the defective component of the product.

Add-on covers

The following covers are available on payment of additional premium:

  1. The lab can choose the North American Jurisdiction Clause. This means that the liability arising from judgments or settlements in countries where US or Canadian laws apply, can be covered
  2. The policy can also cover Limited Vendors Liability for named or unnamed vendors. Limited vendors liability refers to liability arising from the sale and distribution of named insured products by vendors with original warranties and instructions as to the use of the product specified by the manufacturers.

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