Additional Information About Product Liability Insurance
A product liability policy serves as a critical defense for those in the supply chain. Beyond manufacturers, it protects importers and distributors who are often held to the same legal standards. For startups and small businesses, this coverage acts as a safeguard against claims that could otherwise jeopardize the company’s future.
The Defective Products Liability Law and Its Impact
Under the Defective Products Liability Law of 1980, parties involved in the production and supply chain are subject to enhanced liability for damage caused by a product. This applies to:
- Strict Liability – For bodily injury, the law imposes strict liability, meaning the claimant does not have to prove negligence, only that the product was defective and caused harm.
- Broad Definitions – Liability applies to finished products, individual components, packaging, and even inadequate instructions for use.
- Importer Responsibility – If a manufacturer is located outside of Israel, the law treats the local importer as the manufacturer regarding liability.
- Territorial Limits – For companies marketing products internationally, it is critical to tailor the policy to the specific jurisdictions and territorial limits of those markets.
Maintaining Insurance Continuity
To ensure you are never left without protection, annual renewal is necessary. Since most liability policies are written on a claims-made basis, stopping the policy immediately ends the coverage for any new claims, even if they relate to a product sold years ago.
- Run-Off Coverage – If you cease operations or close a business, run-off insurance provides protection for a set period against claims relating to your past activities.
- Extended Reporting Period (ERP) – This allows you to report claims after a policy has ended, provided the incident occurred while the policy was still in force.
Why Arrange Insurance Through Madanes?
At Madanes, we have been providing insurance services to thousands of private and business clients for over 50 years. We specialize in identifying the unique pressure points of your supply chain and will be pleased to structure a product liability insurance policy precisely tailored to your operational needs.
