Taking the Guesswork Out of Various Liability Coverages – Which Coverage Do You Need and Why?
Manufacturer Errors & Omissions
This covers a manufacturing mistake or negligent service that results in a third-party financial loss without bodily injury or property damage.
Trigger of Policy: Financial loss to your customer due to your faulty product
Claim Scenario: You make a product that you sell to an end manufacturer. Your product shows up to your customer and it does not fit into the manufacturer’s machine. Now your customer cannot sell their product and they are losing money. Your customer comes back to you as the part manufacturer and demands their lost profits.
This supports when a company decides to recall its product without any legal mandate, as well as involuntary recalls in which a company has refused to recall a product but is forced to by government regulators. Does not cover product lawsuits.
Trigger of Policy: It is known that your product could cause bodily injury or property damage and, therefore, you need to recall it.
Claim Scenario: You are the manufacturer of a child’s toy. You know a batch of the product had possible metal shards in the product. You have to voluntarily recall this batch of product.
Such insurance covers you and your company for claims involving bodily injury and property damage resulting from your products, services or operations.
Trigger of Policy: Bodily injury or property damage to a third party due to your product
Claim Scenario: You own a business and have customers come on site for a tour. You did not shovel the walkway to the entry of your building. Your customer falls and breaks their wrist.
General liability is the most common coverage and the most requested evidence on a certificate of insurance. General liability is intended to pick up most of your third-party claims. If you run any sort of business that manufactures or distributes a product, or you offer a service, you will want to purchase a general liability policy.
The experienced team at Oswald can help you determine the coverage you need to protect your company.
If you are a heavy manufacturer of component parts to an end use product, it would be in your best interest to purchase a Manufacturer’s E&O policy. This will protect you and your customer for any financial loss that may arise due to faulty parts.
Product Recall is intended as a safety net if you are an end use manufacturer. If your product is going directly into the hands of consumers, you will want to consider this coverage.