Products Liability Insurance

General Public and Products' Liability Insurance

We can assist you with stand-alone general public liability policies or combined public and products’ liability policies. These can be arranged on an annual basis or for a single event.

When you conduct business, you could become liable to members of the public who allege that your negligence in conducting your business has led to their suffering either bodily injury or loss of, or damage to, their property.

A public liability policy is triggered by such claims against your business. This type of cover is often colloquially referred to as ‘slip-and-trip’ cover as this is a frequent cause for claims, ie when someone has fallen on your premises and injured themselves and allege some kind of negligence on your part, for example, that no warning signs were displayed alerting them to the fact that your floors were being washed.

The Consumer Protection Act (‘the Act’) came into effect on 1 April 2011. In terms of section 61 of the Act, “any producer, importer, distributor or retailer of a good is liable for any harm caused wholly or partly as a consequence of a product failure, defect or hazard in a good or as a result of inadequate instructions or warnings provided to the consumer pertaining to any hazard arising from the use of such good.”

In terms of the Act, all parties involved in the supply chain are jointly and severally liable which means that a consumer can effectively chose the ‘easiest’ party (or the one with the deepest pockets) to pursue their claim against.

The Act has made it significantly easier for consumers to pursue legal action because they are no longer required to prove any kind of negligence on the part of the supplier or manufacturer, they are only required to prove that the product has caused them harm or damage.

The Act also establishes the National Consumer Commission (‘the NCC’) which is responsible for enforcement of the Act’s provisions. The NCC is able to issue compliance notices and to conduct investigations.

If you are found guilty of an offence under the Act, you could face a fine and/or imprisonment. Under the Act, you can be fined 10% of your annual turnover or R1 million whichever is the greater.

While a products’ liability policy cannot cover statutory fines (this is against the law), it would cover your legal defence costs which would likely be substantial and any awards of damages made by a court against you or settlement amounts. A robust legal defence is critical should you be charged with an offence under the Act.

No supplier, producer, manufacturer, distributor, retailer, etc, should be without products’ liability insurance. Even if you have back to back indemnity arrangements in place with everyone in the supply chain, the fact that the Act allows for joint and several liability and that the consumer has a choice of whom to sue, means that you could still incur substantial legal costs. By ensuring that you have your own products’ liability insurance you are also not completely reliant on someone else in the supply chain and you retain a large measure of control in the conduct of your defence.

If you would like us to obtain quotes for your consideration, please contact us at info@cfpbrokers.co.za.

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Products Liability Insurance

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