This is really a public liability policy, but with cover specifically related to claims arising from defective products, as opposed liability situations, where negligent acts or omissions of any kind may produce claims.
The notes for this are not long, because the basic cover and wordings follow the PL policy closely. However, some features should be noted:
i. “Defective” products: it is important to note that the products which involve a valid claim must not be in form that the manufacture or producer intended to market them. That is, some mistakes or defect has occurred such as an error in manufacture, producing a dangerous situation. Products which are not safe when they are properly manufactured are a problem for the manufacturer or designer, not the products insurer.
ii. Policy limit: the limit of indemnity may be on an aggregate basis so that early claims reduce available for the rest of the year unless additional cover is purchased.
iii. “Claims-made” policies: these are described above and are slightly more likely with products policies, although again not common. The basic idea of restricting claims to the policy year, or shortly thereafter “shortens the tail” considerably and is therefore attractive to the insurer. Whether the insured will be happy for his cover to expire, so that he may be uninsured when a claim develops late is another matter. Such policies may be difficult to market.
