Product liability insurance – exports to North America
Over the past few years in the UK we have seen a substantial growth in the no win no fee solicitor industry. It is not strictly like this, as most claimants have to buy a policy to protect them if they fail in their claim.
I have not met a solicitor yet who will admit it, but the vast majority of their earnings come from the smaller claims, which the commercial insurance companies are more than happy to settle, without going to court. These are usually sub £10,000. The claimant gets roughly, and sometimes less than, half the total claims cost and the solicitors usually get the lions share. Once you go beyond a certain monetary figure, the insurers decide that they will fight the case and this is where the solicitors start to waiver, ever so slightly.
Whilst the skeleton of the claim they are making, on a claimants behalf, is more than likely to be genuine, it is the way it is spun out and made to be worse than it is, that is having an effect on our industry. But that is another blog point entirely.
This one is about products liability insurance and extending cover for exports to North America and Canada. If you are making widgets and decide to export to the United States or Canada, the chances are your current business insurance policy will exclude cover for this.
If your insurers are happy to do this, you will find that the cost of your insurance will rocket skywards. It may well be that your current insurers do not want the business as many simply do not have the skills or capabilities to deal with this type of cover.
Why is this? Thinking about the scenarios above, a £10,000 claim might be if an employee injures themselves and is off work for a few weeks. There does not have to be broken bones or hospital stays for there to be a multi-thousand pound claim. A similar claim in the US under workmens compensation (the US equivalent of employers liability insurance) would be 6 to 10 times higher.
This typically applies to all liability claims. So, if your widget damages someones business property here, due to faulty manufacture for example, the claim will be 6 to 10 times less than if the damage was caused in the US and the claim was pursued through the US courts.
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