Whether you are a manufacturer, vendor, supplier or an exporter, you are exposed to the risk of product liability claims. In fact, any link in the chain of commerce is exposed to this risk.
Product Liability insurance indemnifies the insured against all sums where the insured becomes legally obliged to pay in respect of Bodily Injury or Property Damage to a Third Party, and accidental loss of or damage to a third party’s property, arising out of the use, misuse, consumption or handling of insured products or goods.
In general, product liability claims are based not on negligence, but rather on strict liability. Under the doctrine of strict liability, a manufacturer is held liable regardless of whether it acted negligently. It allows recovery for an injured customer who might be in a difficult position to prove what a manufacturer did or did not do in the design or manufacturing process. It is presumed that a manufacturer, with “deep pockets”, may be better situated to absorb the cost of liability and would consider such expense in setting the price for its products.