Product Liability Insurance in Malaysia
Product Liability Insurance
A product liability insurance in Malaysia, is to protect the insured against claims for damages caused by the product. The product would have been made, distributed or sold by you.
The claims could be from:
- Third party people or groups
- Authorized parties to use the product
As the product liability policyholder, liability damages to your own staff and workers are covered by:
Product Use Cases for Liability Claims
Depending on the insurer, this Product Insurance can cover for claims for injuries and property damages for the following examples of product use cases:
Commercial Use
- To Display Merchandise
- Intermediate Product and Fixtures
- Part of a Systems Integration
- Food or Goods Storage and Safety
- Factory or Plant Operations
- Transportation and Lifts
Personal Use
- Communications and Entertainment
- Cooking and Eating
- Bathing and House Fixtures
- Transportation
The above is a not a complete list. This will depend on the insurance companies on what use cases they are willing to cover in their policies.
Third Party Damages Caused by Product
Below is a listing of potential third party damages a product can create. Especially when the product did not meet claims or expected operating requirements as stated, instructed or warranted.
- Product exploded on use
- Product caused fire or heat damage
- Product damaged fixtures and finishings
- Product failed to perform as labelled, advertised or claimed
- Product caused a security breach
- People injured or hospitalized in the vicinity of the product
For product liability damages, it has to be proven that the product did not comply to:
- Product’s stated use instructions
- Product’s stated operating conditions
- The product’s regulated or legal standards of compliances and conformances.
Product Liability Insurance Coverage
This insurance plan covers third party claims for bodily harm or damages to property that resulted from using your product. The insurer pays for these claims and legal costs, if the legal findings confirm the insured is liable.
The amounts covered or paid when a claim is made against you, will be dependent on the sum insured in the insurance policy. You have to factor in legal costs of the victim and your own, when buying this insurance.
Product Liability Insurance for Products
This insurance would cover product malfunction damages and claims arising from the following findings:
- Manufacturing Defects
- Defective Materials
- Incorrect Labelling of Product
- Wrong Instructions on Use
- Inadequate or Defective Packaging
What is covered and the level of coverage however, would differ between insurance companies. You will need to talk to an experienced business insurance agent to be clear on what options will be available for you to select.
Comparison of Coverage by Product Liability Insurance and Public Liability Insurance
| Damages Caused By | Product Liability Coverage | Public Liability Coverage | |
| Product Defects | Covered | Not Covered | |
| Product Misrepresentations | Covered | Not Covered | |
| Business Operations | Not Covered | Covered | |
| Business Premises | Not Covered | Covered |
Product Liability Insurance Coverage and Premium Calculation
What is a Product Liability Insurance Policy?
The product liability insurance policy is created to protect the insured from product defects or misrepresentation claims. This policy protects the insured from claims by third parties, for injuries, death, disabilities, losses, property damages and legal costs of the claims, that they suffered. The insurer will pay the claims, if the legal process finds the insured liable for these claims.
How Much Does the Product Liability Insurance Cost?
The price or premiums for the product liability insurance is calculated. This calculation is based on the following factors:
1. Your Business Type i.e., Manufacturer, Importer or Local Supplier
2. Length of time the products have been in the market or planned to be launched
3. Product use cases and where it is to be used
4. Actions taken to reduce the risk of product failure
5. User instructions and labelling
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