Selling a product can create liability even when another company made it
Manufacturers, importers, distributors, wholesalers and retailers can all be drawn into a claim alleging that a product caused bodily injury or property damage. The allegation may involve design, manufacturing, labelling, instructions, storage, installation or failure to warn.
Product liability is commonly part of the products-completed operations section of a commercial general liability policy. Coverage depends on the business role, product, territory, policy wording and date of injury or damage.
Define the products and where they travel
Provide a current list of products, annual sales by category and customer type, countries of manufacture and sale, and whether the business designs, imports, relabels, repairs, installs or modifies them. Identify products for children, food, cosmetics, medical uses, vehicles or other regulated categories because different laws and underwriting requirements can apply.
Review:
- Per-occurrence and aggregate limits for products-completed operations
- Vendors endorsements and additional insured obligations
- Territory and jurisdiction restrictions, including sales into the United States
- Coverage for discontinued products and completed work
- Exclusions for particular ingredients, components or product classes
- Deductibles, defence costs and batch or series clauses
Recall expense is a separate question
Liability coverage for injury or damage does not automatically pay to withdraw, inspect, repair, replace or dispose of the insured’s own product. Product recall, contamination or rehabilitation expenses may require separate coverage, with their own trigger and sublimits.
Health Canada states that manufacturers, importers and sellers must report qualifying health or safety incidents involving consumer products. The applicable law and timeline depend on the product and business role. Maintain a written escalation and recall plan and obtain regulatory or legal advice when an incident arises.
Traceability improves the response
Keep supplier contracts, certificates, test records, batch and serial data, quality-control results, complaints and distribution lists. Establish authority to stop sales and notify the broker or insurer promptly. Review indemnities with legal counsel and verify supplier insurance rather than relying solely on a certificate.
The contractual liability page explains how supply agreements can create obligations broader than the policy.
Review the full product lifecycle
Contact Westoak with product details, sales territories and recall controls. We can help compare available product liability, recall, property and business interruption options without assuming one form covers the entire supply chain.