Products Liability Insurance is designed to compensate the insured for their legal liability to third parties in connection with damage occurring due to a product for which the insured is liable, provided that the product is no longer in the direct possession of the insured and on condition that the damage occurs after the retroactive date stated in the policy schedule.
This is effectively a type of consequential loss cover, that is, it covers damages which may occur as a result of a defect in the “product” (the building in the case of Products Liability for completed operations) or any part of it, after the project has been handed-over and starts to be used.
It is important to bear in mind that the Defective Products Act - 1980 (relating to bodily injury) defines a product as something which is connected to the ground, including a building.
If the risk appears to be remote, bear in mind that a disaster of this type can be extremely difficult to cope with when it pops up unexpectedly.
Whilst insurance for contractors, Contractors All Risks insurance
, other policies for property developers and Professional Indemnity insurance usually provides cover for the period of time in which the projects is being carried out, Products Liability insurance provides cover for a long period of time after the project has been completed (the Sales Law proscribes a 10 year warranty period and in certain cases, such as liability due to structural engineering – the liability period can be as long as 20 years).
You might expect that insurance cover for such a long period will be very costly. However, this is precisely where we come into the picture.
General information about liability for defects in accordance with the Sale Law.
Further useful information concerning Professional Indemnity insurance
and combined Professional Indemnity
and Products Liability policies