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PRODUCT LIABILITY
INSURANCE
The “Product Liability Insurance” issued under the Market Agreement
covers all Sums which the Insured shall become legally liable to pay as damages in consequence of accidental death/bodily injury or disease to
Third Parties and/or loss of or damage to Third Party Property arising
out of any defect in the products manufactured and covered under the
Policy after the products have left the Insured’s premises.
Limits of Indemnity : The Product Liability Policies issued by the
Insurer’s in India will have a maximum limit of indemnity during the
Policy period. The Insurer’s will not issue Product Liability Policies
with unlimited liability. The limit of indemnity if demanded by
Manufacturer’s, the same can be issued subject to approval of the Market
Agreement Committee.
Exports to U.S.A./Canada and other countries may also be covered under
this Policy provided the domestic turnover of the Insured is covered and
the rates, terms, conditions excess etc are complied in line with the
Market Agreement.
Any Mid-term increase/decrease in the limit of indemnity during the
currency of the Policy will be at the sole discretion of the Insurer.
When agreed for any such changes the revised retroactive date showing
the limits of indemnity will be clearly incorporated in the Policy
schedule. Further if the Insured wishes to seek protection for
anticipated liability in excess of available limits of indemnity for
prior periods due to different retroactive date the Insured may also
consider granting of “Run-Off” cover based on the merits of each case.
rates, terms and conditions for such ”Run-Off” covers may be
finalized
by the Insured in consultation with their re-insurers where required.
Risk Classification : Industries are classified under seven groups for
the purpose of this agreement. Where the risk cannot be classified under
any of these seven groups, the Insurer may rate such risks by using the
Market Agreement as guide line for “like or similar risks”. In respect
of risks for which there are no guiding Market Agreement provisions, the
same will be rated by the Insurer on their own without making any
reference to either GIC or the Market Agreement Committee and details
sent for information only.
Premium Rates : The rates of premium are annual rates based on two
factors namely the annual gross turnover and the limit of indemnity any
one year. The following premium rates are applicable to domestic sales
only. When exports to be covered under the Policy, additional premium
along with other provisions shall become applicable. It is very
important to asses and declare the turn over under the Policy by the
Insured at inception of Policy. However, in case the Insured anticipates
any increase in turnover during the currency of the Policy the same will
have to be notified promptly to the Insurer and additional premium paid therefor. The premium will under no circumstances be adjusted on expiry
of the Policy. In the event the Insured anticipates a decrease in turn
over during the Policy period, on intimation of same to the Insurer the
same may be considered for downward adjustment of premium.
Rating on Turnover
Where the limit of indemnity per any one year is Rs.1 Lakh or below, the
following rates shall apply on the previous year’s annual turnover or
the current year’s projected annual turn over whichever is higher. The
turn over means the annual gross sales including all taxes and levies.
The following premium on limit of indemnity any one year shall be
charged where the ratio of indemnity per any one accident to any one
year are as specified here under.
Ratio AOA :AOY Premium
1:1 100% of premium indicated above
1:2 80% of premium indicated above
1 -operation and Development Viz.Austria, Belgium, Denmark, Finland,
France, Germany, GreatBritain, Greece, Icelnd, Ireland, Italy, Japan,
Luxemberg, Netherlands, NewZealand, Norway, Portugal, Switzerland,
Turkey and Yogoslavia.
Category III : Other countries including Non-OECD countries.
The additional premium for Exports shall be charged as under.
All the countries of Exp:3 70% of premium indicated above
1:4 60% of premium indicated above
Premium Rates For Exports
For the purpose of charging premium the various countries are
categorised as under.
Category I : U.S.A. and Canada
(a) Category II : OECD countries such as countries belonging to the
Organisation for Economic Co orts shall be grouped into 3 categories as
above.
(b) Total Exports Turn over for each category of countries as defined
above shall be arrived at.
(c) The basic premium rate as applicable for domestic sales to be
applied on Total Export Turn over separately for each category of
countries.
(d) The premium so arrived at are to be multiplied by the following
factors to arrive at the premium to be charged on the Turnover.
Category I 15
Category II 5
Category III 2
(e) The premium calculated as applicable for domestic sales and
multiplied by the highest multiplier will be the premium on Indemnity.
When exports are involved premium on indemnity will not be charged for
domestic sales.
(f) Total of (d) plus(e) will be the total additional premium for
Exports.
(g) The additional premium so arrived at for Exports to be added to the
domestic sales on turn over only to arrive at the total gross premium
under the Policy.
Compulsory Excess for Domestic Sales: All Policies issued under this
agreement shall be subject to a compulsory excess of 0.5% of the limit
of indemnity for any one accident subject to a minimum of $xxx.The
Insured shall bear this compulsory excess which is applicable to both
property damage claims and death/bodily injury claim inclusive of
defence costs arising out of any one accident.
Compulsory Excess for Export Sales: All Policies covering exports to USA
and Canada shall be subject to a compulsory excess of 1% of the limit of
indemnity for any one accident and a minimum of $xxx The Insured shall
bear this compulsory excess which is applicable to both property damage
claims and death/bodily injury claim inclusive of defence costs arising
out of any one accident.
Voluntary Excess: The following discounts on the premium will be allowed
for the voluntary excess opted for the Insured in addition to applicable
compulsory excess. The voluntary excess is applicable to both property
damage claims and /or death/bodily injury claims inclusive of defect
costs arising out of any one accident.
Voluntary Excess as % of limit of Discount in %
Indemnity per AOA
5.0 2.5
7.5 5.0
10.0 7.5
15.0 10.0
20.0 12.5
25.0 15.0
35.0 20.0
50.0 25.0
Short Period Premium: The following short period scale of premium shall
apply to Policies issued for periods less than 12 months and those
cancelled during currency on the request of Insured subject to the
condition of no claim.
Period (not exceeding) Rate
1 week 10% of the annual rate
1 month 25% -do-
2 months 35% -do-
3 months 50% -do-
4 months 60% -do-
6 months 75% -do-
8 months 85% -do-
Exceeding 8 months full annual rate
Vendor’s Liability Extension: Limited Vendor’s Liability extension under
the Policy covering exports as per the vendor’s clause annexed subject
to payment of additional premium as detailed below is possible under the
Policy.
• For named vendors: 5% of the premium on limits of indemnity plus
export turnover premium.
• For unnamed vendors:10% of the premium on limits of indemnity plus
export turnover premium.
• In respect of products not manufactured by the Insured but
manufactured by their sub-contractors and/or loan and license
manufacturers on their own brand name, same can be covered with
additional information made available by payment of additional premium
of 10% of the indemnity premium plus turn over premium on products
manufactured by third party.
Exclusions: The following are the exclusions under the Policy:
• For costs incurred in the repair, reconditioning, modification or
replacement of any part of any product which is or is alleged to be
defective.
• For costs arising out of the recall of any product or part thereof.
• Arising out of any product which with the Insured’s knowledge is
intended for incorporation in to the structure, machinery or control of
any air craft.
• Arising out of deliberate, willful or intentional non compliance of any
statutory provision.
• Arising out of poor financial loss, such as loss of good will, loss of
market etc.
• Arising out of fines, penalties punitive and /or exemplary damages.
• Directly or indirectly occasioned by happening through or
inconsequence of war, invasion Act of foreign enemy, hostilities, civil
war, rebellion, revolution, insurrection or military or usurped power.
• Directly or indirectly caused by or contributed to by or arising from
;
a) Ionizing radiations or contamination by radioactivity from any
nuclear fuel or from any nuclear waste from the combustion of nuclear
fuel.
b) The radioactive toxic, explosive or other hazardous properties of any
explosive, nuclear, assembly or nuclear component thereof.
• For damage to property belonging to the Insured or held in trust or in
custody or control of the Insured or a person in the service of the
Insured.
• Arising out of injury and/or damage occurring prior to the retro
active date in the schedule.
• Arising out of deliberate, conscious or intentional disregard of the
Insured’s technical or administrative management of the need to take all
reasonable steps to prevent claim.
• Injury to any person under the contract of employment or
apprenticeship with the Insured, their contractors and/or
sub-contractors when such injury arises out of the execution of such
contract.
• Arising out of contractual liability unless liability have existed in
the absence of the specific contract.
• Arising out of any product guarantee.
• Arising out of claims for failure of the goods or products to
fulfill
the purpose for which they were intended.
• For liabilities arising out of the products which have left the
custody and control of the Insured prior to retro active date specified
in the schedule.
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