Product Guarantee Insurance

Insurance from Rowlands & Hames.

Product Guarantee Insurance Cover

Product Guarantee Insurance provides cover against the cost of replacing, reworking or recovering products that have failed to perform their intended function. This may be due to faulty design, manufacture, installation, after handover to the customer.

The cover exists because a product liability policy does not cover repair or replacement of the faulty products themselves nor consequential losses sustained by the user arising out of these faulty products.

Product guarantee insurance covers against replacing products that have failed to performA good example would be where a steam boiler is manufactured and supplied to generate power in a factory. The boiler is defective. It doesn’t injure anyone, it doesn’t cause injury and so there’s no products liability claim. However, since the boiler can’t generate power, there are no operations at the factory, resulting in a loss of production. There could be a claim against the supplier for the cost of repairing or replacing the boiler. There could also be a claim against any loss of production.

It does not require injury or damage to have occurred (unlike a product liability policy) nor does it require the risk of injury or damage (unlike a product recall policy), but simply guarantees the product, as a ‘safety net’ for the insured’s quality management processes.

The only prerequisite is that it fails to perform the intended function. Liability covered will be contractual as there can be no liability in tort to repair or replace a defective product.

To find out more, please call us on 01253 594211 or contact us online and we will be pleased to explain further.