Product Liability vs. Professional Indemnity Which One Is Best For You?

One of the areas of greatest confusion is the difference between professional indemnity, general liability, and product liability insurance. Professional Indemnity Insurance provides coverage to professionals (corporate or individual) for any negligent act, error or omission that is alleged to have occurred in the performance of their professional activities and duties. It differs from the General Liability and Product Liability Coverage in that the acts covered are those acts performed by an engineer, architect, doctor or lawyer in the provision of professional services to their clients. To better understand this coverage, we will briefly discuss Product Liability, Professional Indemnity, and how it works below.

A. Product liability

Product liability is the legal responsibility of a manufacturer to a consumer of its product. Liability arises from the negligent manufacture of a product, including faulty or defective workmanship, materials, or components. It is a liability that arises from the failure of a manufacturer to adequately manufacture, test or warn about its product and occurs when the product negligently departs from its intended function.

Product hazards include bodily injury or property damage arising from the products of the named insured, but only if the bodily injury or property damage occurs off the premises owned or leased by the named insured and after the physical possession of the products has been transferred to others and is in the flow of trade.

Completed operations include bodily injury and property damage arising out of operations or reliance on a representation or warranty made at any time with respect thereto, but only if bodily injury or property damage occurs after that such operations have been completed or abandoned and occur off-site. property of the Insured designated or rented to it.

Negligence attributable to Professional Liability, which includes services or consultations rendered by negligence by architects, engineers or other professionals, is excluded from the General Liability and Product Liability Coverage.

B. Professional compensation

The Professional Indemnity Policy is designed to address the exclusion of professional services in the Product Liability / CGL Policy. The Professional Indemnity Policy covers the negligent services of a professional to his client and covers an act of negligence, error or omission on the part of an insured in the execution of his professional activities. These professional activities usually include the design, the drafting of specifications, feasibility studies, calculations, maps and their supervision by the insured professional.

The professional indemnity insurance, or errors and omissions, protects the insured, his employees and directors against the responsibility derived from his professional negligence. It covers the Legal Responsibility to indemnify a third party who has suffered an injury, loss or damage created by the existence of a duty of care towards third parties as a result of a negligent act, error or omission in the provision of professional services by the insurance .

In light of today’s increasingly litigious society, professional indemnity insurance provides important protection for the insured professional.

Coverage is attached under the Professional Indemnity Policy as soon as product design begins and provides protection against any negligent professional act, error or omission that could result in a claim by a third party.

C. Applicability of professional indemnity coverage

When discussing the applicability of professional indemnity coverage, there are certain basics to consider.

First of all, professional indemnity is third-party coverage that is liability coverage, not property coverage, that is provided to the insured for claims against the insured by third-party claimants.

Second, while coverage is attached from the beginning of the project design phase, a claim will not be made until after the product is delivered and the product has left the insured’s premises.

The liability coverage that occurs at the insured’s workplace must be found elsewhere, such as General Liability, All Risks, or Builder or Contractor Protection and Indemnity policies.

Third, of course, the claim must arise from a failure in the professional services rendered. There is some limited coverage granted under Professional Liability for failure of workmanship, materials, and / or components. Additionally, any claims for defective materials or components, manufacturing defects, or workmanship would be included in the product liability coverage.

Fourth, this policy also covers any unintentional and unintentional breach of a patent or copyright infringement.

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