The policy covers all sums (including defence costs) which the insured becomes legally liable to pay as damages as a consequence of:

• Accidental death/bodily injury or disease to any third party;
• Accidental damage to property belonging to a third party;

...arising out of any defect in the product manufactured by the insured and specifically mentioned in the policy after such product has left the insured’s premises.

Coverage is written on a claims made basis, i.e. a liability policy that provides coverage for an injury or loss if the claim is first reported or filed during the policy period.

However, the policy offers the benefit of retroactive date, i.e. a date stipulated in a claims-made liability policy declarations section as the first date of incidents covered by the policy. The retroactive date is designed to provide coverage for claims resulting from incidents that take place prior to the current policy term.

Renewal claims-made policies usually have the retroactive date of the first policy issued to the insured. When this is not done, there is a gap in coverage.

• Global extension: Policy can be extended to cover liability arising out of judgements or settlements made in countries anywhere in the world.
• Limited vendor’s liability extension: Limited vendor’s liability means liability arising out of sale and distribution of named insured products by vendors with original warranties and instructions of use of the product specified by the manufacturers.

The amount of coverage your business needs depends on:

• Perceived risk from a product: You should first consider the amount of risk associated with your product. For example, a heavy machinery manufacturer is at a greater risk of being sued than a manufacturer of linens and would therefore need more liability insurance.
• Jurisdiction/Country of exports: If you export to countries across borders with a history of awarding high damage amounts to plaintiffs, you will typically need to have product liability insurance with higher coverage limits.

This depends on the type of product you deal with. The higher the risk your product represents, the more expensive your premiums will be. Premiums also depend on the total turnover, countries you export to, coverage limits, policy extensions and deductibles.

In addition, you can reduce your insurance costs by reducing your risks or by instituting certain quality control procedures at your company. Identifying, eliminating and mitigating the risks can help protect you against future losses and can also lower your premiums.

The policy is subject to a compulsory excess of 0.25% of the AOA limit, subject to a maximum of Rs.1,50,000 and minimum of Rs. 1,500. Opting for a higher excess on a voluntary basis qualifies you for a discount in the premium payable.

HDFC ERGO provides coverage on a wide range of low-medium risk product classes on a claims-made basis. Claims-made coverage provides lower premiums, which is particularly beneficial to new companies in a start-up phase.

• We specialise in:
  • New products.
  • Flexible liability coverage for manufacturers, sellers or distributors of a wide range of products.
  • Claims-made coverage, ideal for smaller, start-up companies.
  • Worldwide coverage: With HDFC ERGO’s extensive global network, we can help you place admitted covers in countries where it is a statutory requirement.
• We can customise coverage for your particular needs such as:
  • Product liability in combination with E&O and general liability.
  • Product liability with vendor extensions.