Any product that has a use also has a potential for misuse and harm. it may
break unreasonably fast, damage
someone or something, or even
be promoted in a misleading
manner. enter product liability
—- and enter insurance policies
to cover that liability.
The concept of product liability
has broadened well beyond its earliest
common-law beginnings, and so, too,
has Product Liability insurance. Product
liability once described only a narrow
transactional breach between the seller
and buyer of a product. Nowadays,
though, it can be interpreted to encompass virtually any situation in which
someone may be held responsible for
harm attributed to a mishap with a
product. As a result, Product Liability
insurance is now built to cover the
various parties likely to be brought into
a product lawsuit. Those parties can
be any entity involved in the product
stream: manufacturer, importer, whole-saler/distributor, and retailer.
Most Product Liability Coverage
is now included as part of a General
Liability policy, but more specialized,
complex products often demand special handling and a carrier that’s committed to understanding the nuances
of the product and its associated risk.
“Carriers sometimes shy away from
unusual products,” says Angela T.
Williams, Vice President of California
Brokerage at Burns & Wilcox.
To illustrate that hesitance,
Williams points to a case involving
the manufacturer of an antigravity
treadmill that provides rehabilitation
patients with a low-strain workout.
the Great Wall
For months, market analysts speculated that the rising cost of labor and raw materials in china and the appreciation of the Yuan, its currency, would slow exports. in fact, china’s gross domestic product did slow to
9. 5 percent for the second quarter, down slightly from 9. 7 percent in the first
quarter, while manufacturing activity dropped for the fourth straight month
in July. Yet china continues to export at a record pace.
in 2010, the value of chinese goods exported to the u.s. was $364.9 billion,
up 23 percent from a year earlier. that’s a lot of digital machinery and
equipment, power-generation equipment, clothing, toys, furniture, and
footwear flowing into the u.s. globally, meanwhile, china’s exports were
valued at $175 billion in July 2011 alone.
“such a high volume translates into a huge potential for product liability
claims, but in most cases, it won’t be china that bears the cost of those
claims. in fact, most chinese companies that manufacture failing products
will never even see a claim, instead leaving distributors and retailers in end-use markets abroad to bear liability,” says melanie elias, director of claims at
minuteman adjusters, inc., of farmington hills, mich.
take the case of printed jersey lounging pants produced in china and
popular in the united states. although they are marketed as “pajama
pants” and were exported as sleepwear, they don’t meet u.s. standards for
flammability resistance in sleepwear. a young autistic boy, wearing the