In December 2016 Cuisinart was the talk of the town, and not in a good way. Consumers of Cuisinart food processors began reporting mouth injuries and tooth damage related to pieces of processor blades that ended up in their food.
Cuisinart announced a massive recall of the riveted blade products sold in the US and Canada. The recall encompassed products sold from July 1996 to December 2015. The large window for item production causes other issues, which we will address in a moment.
What Does Products Liability Cover?
Products liability insurance is the coverage that would respond to bodily injury and property damage claims caused by products produced by the policyholder. Sometimes this coverage is included in a general liability insurance policy, but for companies that produce large numbers of consumer products it is often stand-alone coverage.
This insurance protects against medical claims for bodily injury or illness, financial claims against property damage, and legal defense costs should a claim turn into a lawsuit. A large number of claims due to a product or products could result in a class action lawsuit, like in the case of the Cuisinart recall.
With such a lengthy timeline of products being sold, where is the products liability coverage?
Which Policy Responds?
This is a complex question with many possible answers:
All of the Cuisinart blade injuries have been reported in the last several months. Products liability for any bodily injury or property damage may come from the current policy. Or would it?
The affected products were sold over a 19 year period. Products liability coverage is typically triggered by a claim, so the policy or policies that were in effect over the last several months would provide coverage. However, it would depend on how the policy or policies were written.
Full Prior Acts?
Assuming that Cuisinart and/or their parent company had a full occurrence policy with the same insurance company every year for the last 19 years, then there is no question that the insurance company would respond to claims.
One thing business owners should look for in a products liability policy would be the absence or presence of full prior acts coverage. Full prior acts coverage allows a policy to respond to claims that are made involving faulty products made in years past, as well as current products made by the policyholder.
An exclusion of prior acts coverage on a full occurrence policy means the policy will respond only to claims on products made in the current policy term. This exclusion would be bad news for Cuisinart, since the products in question were produced well before their current insurance term.
No matter how old your products may be, there is always a margin for error or materials breakdown. Products liability is a must for any company that produces a product that is sold to a wholesaler distributor or directly to a consumer.
Products liability insurance coverage can be a complicated issue. With the help of an experienced broker, companies can avoid potential gaps in coverage. Contact Hayes Brokers today for a full risk management analysis and to find out how to add products liability insurance to your portfolio.