Archive for the ‘products liability insurance’ Category

Product liability insurance – exports to North America

Wednesday, July 13th, 2011

Over the past few years in the UK we have seen a substantial growth in the no win no fee solicitor industry. It is not strictly like this, as most claimants have to buy a policy to protect them if they fail in their claim.

I have not met a solicitor yet who will admit it, but the vast majority of their earnings come from the smaller claims, which the commercial insurance companies are more than happy to settle, without going to court. These are usually sub £10,000. The claimant gets roughly, and sometimes less than, half the total claims cost and the solicitors usually get the lions share. Once you go beyond a certain monetary figure, the insurers decide that they will fight the case and this is where the solicitors start to waiver, ever so slightly.

Whilst the skeleton of the claim they are making, on a claimants behalf, is more than likely to be genuine, it is the way it is spun out and made to be worse than it is, that is having an effect on our industry. But that is another blog point entirely.

This one is about products liability insurance and extending cover for exports to North America and Canada. If you are making widgets and decide to export to the United States or Canada, the chances are your current business insurance policy will exclude cover for this.

If your insurers are happy to do this, you will find that the cost of your insurance will rocket skywards. It may well be that your current insurers do not want the business as many simply do not have the skills or capabilities to deal with this type of cover.

Why is this? Thinking about the scenarios above, a £10,000 claim might be if an employee injures themselves and is off work for a few weeks. There does not have to be broken bones or hospital stays for there to be a multi-thousand pound claim. A similar claim in the US under workmens compensation (the US equivalent of employers liability insurance) would be 6 to 10 times higher.

This typically applies to all liability claims. So, if your widget damages someones business property here, due to faulty manufacture for example, the claim will be 6 to 10 times less than if the damage was caused in the US and the claim was pursued through the US courts.

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Office insurance – product liability

Wednesday, June 8th, 2011

We are seeing more and more office insurance quotes, where there is an increased product liability exposure. This occurs where an office based business is, to all intents and purposes, acting as a wholesaler. They may not actually hold the full amount of stock, as this is warehoused. What they will do is have a basic amount of day to day promotional stock. This can be anything and everything. The two quotes we have had this week have been for a farm machinery dealers office and a computer resellers.

Normally, you would approach a business insurance broker and they would get a simple, basic office quote. Now, if you are a dealer, what happens if one of the products that you supply causes injury, illness, disease or damage? You may well think that you can pass this liability on to the company that supplied the machine, or computer, or book or whatever else you sell.

However there is a potential problem. Firstly, you may not be allowed to do this contractually. Deep in the terms and conditions of the sellers may be a clause that says they are not responsible for damage or injury caused. Secondly, they may not have insurance in place and thirdly, they could go bust or out of business by the time you want to claim. Whether you like it or not, in each of these 3 scenarios, your company will be expected to pay the claim. You cannot simply rely on a basic office package to pick up your liability in this case.

You need to speak to your broker and get them to advise you as to whether you need to take out, what is effectively a contingency cover. You will need to declare your turnover, where you source the products from, where you export to and importantly, what type of products. It is not that insurers do not like imported products, but that it is much more expensive to pursue a claim against an overseas manufacturer.

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Product liability – exports to US and Canada

Saturday, April 16th, 2011

Nowadays there are many thousands of high street retailers, who also operate a retail website. This does not mean they are neglecting their main business, just looking for an extra way of earning income.

If they have a standard shop insurance policy, then it is worth making the insurers, or the broker, aware of this additional activity. The standard, package type, policy will no doubt have a specific exclusion. You will find that most business insurance policies, where there is product liability cover have the following type of exclusion:-

Product Liability

Cover is excluded in respect of liability for products knowingly supplied or exported to the United States of America and/or Canada.

If a shop is selling products and they know that there are customers in North America, which in this day and age is very easy, then they need to make sure they have the right cover. It is not enough to say, “it’ll never happen to me” “I’ll never get a claim” or anything similar. Claims do occur, with increasing frequency, and you should always seek advice about the best type of policy.

It may well be that if you declare that only a small proportion of your turnover, usually less than 5%, is in respect of exports, and, importantly, you are not manufacturing, then your policy will give you cover. But, the policy will state that any actions brought against you must be in a UK court of law (as this is cheaper for insurers). Therefore, if you do have the relevant cover and you receive notification of a potential claim, then you must do nothing except speak to your business insurance broker in the first instance. Do not react to any notifications you receive without seeking some sort of advice from your broker.

One poitn to mention is where the exclusions say “knowingly”. If you sell a product to Mr A , who sells to Miss B who then sells to a customer in America, you cannot control that supply chain and cover shoudl apply. But, you need to watch out as some policies will simple exclude ALL products liability in respect of US/Canada exports, whether you are aware or not.

Posted in business insurance, product liability insurance, products liability insurance, shop insurance | Comments Off

Products liability insurance – who needs this cover?

Saturday, August 21st, 2010

We often get asked, when people are looking for a business insurance quote, whether they need products liability insurance.

The answer to the question, which does not help, is yes, probably. There is no legal requirement, under UK law, for a business or individual to have products liability.

We first of all need to understand what this cover is. Simply put, if you manufacture or supply (with the manufacture being undertaken by someone else) a product, which causes injury, illness, disease or damage to another person(s) or property, you can be held legally liable. Now, as you can be held legally liable you would think it follows that you should have the cover, but this is not the case.

So, now we understand that 80% of UK businesses (who supply or manufacture products) need this cover, what happens if you do not have it? If I go to a supermarket and buy a tin of beans, in UK law I have a financial relationship with the supermarket. Therefore, if the product poisons me, I will claim against them. The law is not concerned with who made the product, I claim against the party I bought it from.

The supermarkets insurers would then pay out to me, with their insurers deciding whether to subrogate (or claim) against the business insurance insurers of the ultimate product manufacturers. This is where it gets interesting, every link in the chain from product manufacture to sale, which can be three, four, five or more companies, needs to have insurance cover.

The potential for a claim is low, but you really should have the cover in place. You don’t need to have the cover, no-one is going to quote UK law to you to prove you need the cover. But, if you want to get adequate protection for your business you really should give us a call to get your own product liability insurance quote.

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Wholesalers insurance – who do you import from?

Monday, February 8th, 2010

When looking around for a wholesalers insurance quote, you really need to have certain information to hand to make this process as smooth as possible. Financial information about the company, such as estimated turnover, wages and gross profit are a minimum.

When you look at the different elements of cover provided by the policy, there are certain questions that you will be asked. One of these relates to the actual products that you are wholesaling. Here in the UK, it does not matter where you bought the products from. If I purchase from you, this is the financial relationship that is governed by English or Scottish Law.

If there is an injury or damage caused, then I am entitled to make a claim under your product liability insurance. Your insurers, if a valid claim, can choose to pursue settlement against the insurers of the original manufacturers, but your policy will pay out first.

So, insurers want to know where you import from. If you buy within the EU this is good, as a potential claim is easier to pursue than if you import from the Far East. This is not saying that there is a difference in the quality, simply that the legal costs (for your insurers) in pursuing a claim are cheaper within the UK/EU than outwith.

So, you need to declare to your commercial insurer exactly where you are sourcing the products from. Some policy wordings need to have separate clauses added noting if imports are received from outwith EU. Certain, smaller, underwriters simply do not have the capabilities to underwrite these types of products and you are more suited to arranging a policy with a different capacity provider.

Posted in product liability insurance, products liability insurance, wholesalers insurance | No Comments »