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Products Liability

Products Liability

Hayes Brokers believes that every business should have insurance.  The type of business you own and the operations of your business will determine the types of insurance policies you will need. If your business makes or distributes products to consumers, it is imperative that your business have either a general liability policy that includes products liability or a stand-alone products liability policy. What Is Products Liability Insurance? Products liability insurance is often referred to as products and completed operations insurance. It is usually, but not always, included in a General Liability or Business Owners Package policy. The Insurance Services Office (ISO) defines a products and completed operations hazard as “‘bodily injury’ or ‘property damage’ occurring away from premises you own or rent and arising out of ‘your product’ or ‘your work’…” (CG0001 Page 15). While this is a standard definition, it may vary slightly by insurance company and policy. It is important to note that products liability covers not only a physical product, but also work product such as building and installation.  This coverage is triggered by bodily injury (including death) or property damage.  However, products liability insurance does NOT cover product recall. Do You Have Products Liability Insurance? The best way to determine if you have products liability coverage is to review your policies with your insurance broker.  While this coverage is often included in some policies, the coverage may be excluded for certain business sectors including those that manufacture or distribute the following types of products: Products for children. Consumables (food and drink). Products that are applied to the body (pharmaceuticals and cosmetics). Medical products. Holistic health...
Products Liability Insurance

Products Liability Insurance

Hayes Brokers believes that every business should have insurance.  The type of business you own and the operations of your business will determine the types of insurance policies you will need. If your business makes or distributes products to consumers, it is imperative that your business have either a general liability policy that includes products liability or a stand-alone products liability policy. What Is Products Liability Insurance? Products liability insurance is often referred to as products and completed operations insurance. It is usually, but not always, included in a General Liability or Business Owners Package policy. The Insurance Services Office (ISO) defines a products and completed operations hazard as “‘bodily injury’ or ‘property damage’ occurring away from premises you own or rent and arising out of ‘your product’ or ‘your work’…” (CG0001 Page 15). While this is a standard definition, it may vary slightly by insurance company and policy. It is important to note that products liability covers not only a physical product, but also work product such as building and installation.  This coverage is triggered by bodily injury (including death) or property damage.  However, products liability insurance does NOT cover product recall. Do You Have Products Liability Insurance? The best way to determine if you have products liability coverage is to review your policies with your insurance broker.  While this coverage is often included in some policies, the coverage may be excluded for certain business sectors including those that manufacture or distribute the following types of products: Products for children. Consumables (food and drink). Products that are applied to the body (pharmaceuticals and cosmetics). Medical products. Holistic health...
More on Product Recall Insurance

More on Product Recall Insurance

It seems that every day in the United States there is another product recall. These recalls can be large or small and affect nearly every industry from medicine to children’s toys, cars, food, shoes and clothing.  No consumer-driven industry is immune. While products liability insurance will often cover claims and lawsuits for bodily injury and property damage due to faulty products, there is still the matter of all the other products that were manufactured at the same time or in the same way. Because these products have the potential to cause similar bodily injury or property damage, they would trigger a product recall. Product recall is not covered under products liability insurance, so a separate product recall insurance policy is required. What Is Product Recall Insurance? The cost to businesses to recall or repair faulty product can add up quickly. Consider the costs to do the following: Notify distributors and retailers about the faulty product. Remove the product from store shelves. Reimburse the distributor and/or retailer for the product. Reimburse consumers who purchased the product prior to recall. Transport the product back to the manufacturer. Repair the faulty product or destroy it. Current and future lost revenues due to damaged reputation.   Product recall insurance is designed to protect businesses  with recall due to faulty product from first notification to regaining consumer trust.   Do You Have Product Recall Insurance? Unless your business has specifically purchased product recall insurance, it is unlikely that you have it. The coverage is usually excluded from General Liability and Business Owners Package policies. How To Protect Your Business Independent third-party testing by a...
Products Recall: A Primer

Products Recall: A Primer

If you’ve been watching or reading the news at all in the last 12 months, you know that besides cyber hacking, the big news has been about product recalls. Nearly every industry has been affected by some sort of product recall in the last year, and something you own has probably been subject to recall in the last few years. If you company offers a product, chances are you may be subject to a product recall at some point during the duration of your business.  Product recalls are expensive, and unfortunately they probably aren’t covered under your business owner’s policy or your products liability insurance, if you have it. Why Are Products Recalled? Generally products are recalled for one of two reasons (and sometimes both): Because a manufacturing defect occurred that may cause harm, injury or death. Because a manufacturing defect DID cause harm, injury or death. Recently General Mills issued a product recall on two of their cereal products. The products in question were meant to be gluten-free, but it was discovered that wheat flour containing gluten may have been introduced at one facility during the manufacturing process. It is unclear whether injuries linked to the product were known at the time of the recall, but General Mills announced the recall when they uncovered the manufacturing error.  All products were removed from store shelves and customers were directed to return their products for a refund. On the other end of the spectrum was the Takata airbag recall covering 10 years of vehicles and eight fatalities.  The company allegedly failed to notify federal regulators though they had known about...