How the History of Product Liability Insurance Affects Business Today

When thinking about history and business risks, how are we affected today? Most people know that product liability insurance is a must for all product manufacturers but have they really learned from history?

Hedge liability risks are an important aspect of this. The liability for bodily injury and property damage from product defects is regularly inspected by the product liability insurance officers.

This so-called advanced Product liability Insurance covers certain costs that help the manufacturer with resale or processing. There are some limitations of the product liability claim. The product liability claim of the injured needs to be made within three years after the victim becomes aware of the damage and the person liable must have the knowledge or should have become aware of the damage.

Your product liability insurance can cover this claim. It is inhibited by negotiations between the parties. Moreover, the law refers to the regulations of the Civil Liability Act, that establishes the limitations for legal succession. The expiry of claims is restricted too.

As per the Liability Act, the claim can be made after 10 years. Liability can also be valid under other provisions.

Other offenses of product liability are found in special laws, such as the Medicines Act or the Food Act. There are some different rules to limit liability and product concept is resigned with respect to these rules. If the claim has been made in accordance with the law, your product liability insurance will cover it.

The product liability insurance in the USA under the transposition of national law. It covers a time frame of three years. The Product Liability Act regulates the liability of a manufacturer for defective products. Under this law, all tangible personal properties are covered, even if they have been incorporated into another movable property or into forms of immovable property, as well as electricity. Drugs are excluded from the Product Liability Act. Thus, if you manufacture drugs, you will not get product liability insurance.

The history of product liability insurance is quite old. Even the legal system of the Middle Ages required liability for different activities and products. Reasonable obligations were considered for care and marketing. On the basis of the law, the general duty of care guides the liability. It is a duty to act or omit or to avoid, reduce preventable risks.

This formed the basis for the later legal regulations. In the summer of 1968, the EC Commission began preliminary work on the standardization of intra-Community regulations on product liability. This synthesis had been interrupted in 1970 because of the negotiations to the first enlargement of the Community. They were resumed during the summer of 1973. In August 1974, the first draft was submitted. This led to the demand for product liability insurance.

The second draft was submitted in July 1975. On 9th September 1976, a proposal submitted to the Council met with various criticisms. A new proposal which submitted in 1979. On 23 May 1980, the Council invited the Commission to withdraw this. Only on 25 July 1984, a consensus was adopted. In Article 19, I of the EC Directive, the date of notification was fixed at a time frame of three years. The announcement took place on 30 July in 1985. It was not until about a year later that the Product Liability Act was implemented.

After this, insurance companies introduced product liability insurance as a protective measure against damage claims.

The Benefit of Insuring Your Manufacturing Business with Product Liability Insurance

If you are a product manufacturer, you are responsible for all damages (personal or property) that may be caused by the goods you sell, manufacture or import. Regardless of whether the damage was caused to a client or to a third party, you will be liable.

For example, the craftsman who creates jewelry is liable if the jewelry contains metals that cause allergies, and the restaurant is responsible if food items lead to sickness.

A product liability insurance policy can protect you due to any negligence.

The failure is usually caused by a “latent defect” that prevents the object from running correctly. This defect may be due to a manufacturing problem or design, improper assembly, or there may be a defect in the material itself, etc.

In addition; you are also responsible for mistakes made during delivery, storage, conservation (e.g. rupture of the cold chain), and even the facility for certain goods, as well as errors in the labeling.

You will be considered liable for mistakes in the user manual too. You should request a product liability insurance quote right away before a defective product claim is made.

The product liability insurance policy compensates victims of all their injuries caused by the goods you sell. It plays both in favor of customers of the company and the third parties because it is an assurance of tort and contract. However, there are a number of exceptions.

The product liability insurance does not apply in the case of serious misconduct or course for negligence caused deliberately. In addition, the contracts “core” excludes damage caused by new products in the market. In this case, you must request an extension of warranty.

The damage caused by hidden defects can be considerable. Because of an affected product, thousands of copies may not be sold. Nevertheless, the insurance policy will compensate the victims instead of the company. To limit these benefits, most product liability insurance contracts include a “globalization” clause.

With this clause, the insurer considers that there is a single claim from the time when many claims come from the same error.

In this case, it pays a total capped compensation. The contractor receives this limited benefit and should, in turn, compensate the victims in relation to actual damages they suffered. Clearly, this clause limits the warranty of product liability insurance.

The company can be held liable for damage to products – even after the sale is made.

This risk will be covered by an extended warranty for product liability insurance or specific “after delivery” insurance. The manufacturer-seller may be liable for damage that would be caused by its products.

The buyer simply demonstrates the existence of a hidden defect of the product in question for the company that has been held liable.

This heavy liability can be assured. A warranty of the product liability insurance will be extended based on:

– The inherent vice of the product (e.g. a manufacturing defect that makes the use hazardous);

– The insufficient or erroneous recommendations (e.g. a manufacturer does not indicate any precautions) and packing mistakes.

Overall, you have to think about consumer protection and product liability insurance can be of great help to you in defense to these type of liability claims.