Product Liability Insurance

Product Liability InsuranceStephen R. Jordan

President

04/24/23 www.jordanjordaninsurance.com2

Jordan & Jordan Insurance Group, Inc.

Agenda What is Product Liability? Legal premises for Product Liability Why the need for Product Liability

Insurance Outline of the insurance Process Q & A


PRODUCT DEFINITION

Products’ production, marketing, distribution Any and all packages, containers, parts, and

accessories. Any and all instructions, labels, warnings,

warranties, marketing, and advertising information that is related to the products.


PRODUCT LIABILITY

Legal liability incurred by a manufacturer, merchant, or distributor because of injury or damage to a third party resulting from the use of their product.


PRODUCT LIABILITIES(CAUSES FOR LIABILITIES)

Errors in design Errors in production Inadequate instruction/ Inaccurate product

label No Warning Labels


LEGAL PREMISES FOR PRODUCT LIABILITIES

Legal Premises are different for every state, very high rate of law suits ( law suits include trial by jury, monetary punishment, bilateral responsibility, public cognition)

Involving the responsible partyAny and all production, all premises for marketing, including the manufacturer, merchant, and distributor that is related to the product


AREAS OF COVERAGE(Things that constitutes monetary damages)

Medical Expenses Reduction In Income Bodily Injuries Emotional Injuries Punitive Damages


Trend of Million Dollars Indemnity

0102030405060708090

100

95-9798-9900-01


SERIOUS CONSEQUENCES RESULTING FROM PRODUCT LIABILITIES

Long-term Investigations Lengthy ruling period High medical and other expenses High Lawyer expense Loss of privileges and controls Unpredictable financial effects Bad reputation for the product Damages to the market share Inability to secure additional distributors


CHARACTERISTICS OF RISKS IN PRODUCT LIABILITIES

(IBNR) Incurred But Not Reported Long Tail Exposure


HOW TO MANAGE PRODUCT LIABILITY RISKS

Avoid risks Undertake risks Pass the risks to someone else Buy Insurance against risks


Product Liability Insurance

Protection against financial loss arising out of the legal liability incurred by a manufacturer, merchant, or distributor because of injury or damage to a third party resulting from the use of a covered product.


AREAS OF COVERAGE(During the policy period, and within the contract)

Legal liability incurred because of injury or damage to a third party resulting from the use of the covered product

Litigation Fees


AREAS OF COVERAGE(Policy Period)

Occurrence Policy All incidents must happen within the policy

period. Claim Made Policy

All incidents must be happen within a policy time and reports have to be made in the policy period.


BASICS OF EXCLUDED LOSSES

Purposeful acts Owner’s Liability Contamination War and or acts of war Unauthorized changes to the product


THINGS THAT AFFECT THE INSURANCE RATES

Total Insurance Price = Total Sale Amount x Rates Things that determine Insurance Rates

Quality & Risks of the productLiability Amount and DeductiblesMarketing/Distribution AreaType of coverage

Special endorsementsGross sales amount


WHY PURCHASE PRODUCT LIABILITIES INSURANCE?

When exports are made to an area where the law is uncertain and is effecting the product

When it is impossible to successfully avoid all liability risks

To protect the products’ reputations To protect the exportation market To maintain stable monetary conditions To meet the need of the countries of imports


CONSIDERATIONS BEFORE INSURANCE PURCHASE

Financial ratings of the Insurance Company When processing claims (consider the location and the

prevailing laws where the product is being sold) Policy covered area and the prevailing laws Types of coverage

Occurrence form Claim made form

International acceptance of the Insurance Policy- ISO Insurance Policy


How can you save on your insurance premiums.

Build a great product!! Document your quality control and R&D procedures.

Show compliance with all industry standards and government regulations.

Have a product recall plan in place. Show that your suppliers have purchased

insurance and have you name as additional insured.


How can you save on your insurance premiums-Continued

Self-Insurance No Insurance Insurance with a high deductible (100K to

250K). Must have stable financials. Do not insure products with a low risk

classification. Captives


How can you save on your insurance premiums-Continued

Hold Harmless Agreements Have warranties and manuals review by legal

counsel. Create safety programs for the consumer. Forecast your sales correctly!! Make certain the agent knows your business.

Pricing usually comes down to the relationship the agent has with the Insurance Company.


Why Partner with Jordan & Jordan?

1. 80% of our revenue comes from Product Liability Insurance.

2. Jordan & Jordan focuses on Manufacturers with large product exposures.

3. Jordan & Jordan now has an office in Qingdao, China.4. We can assist companies in setting up a registered

agent for insurance purposes.5. Help develop loss prevention plans.6. 24 Hour Service by web access or telephone support

(English Only).


PROCESS OF PURCHASE1. Prepare all relative data (Application & Loss Runs, Product Brochures, and Certificate of Insurance from your suppliers))

2. Ask for quote

3. Accept the insurance plan 4. Pay Insurance Premium

5. Receive Policy 6. End of year Adjustments (based on actual gross sales)Beware The Audit!!!

Repeat to 1


Q & A

At this time, please feel free to ask me any questions.

Product Liability Insurance

Documents

Transcript of Product Liability Insurance