• Why Manufacturers Need E&O Liability Insurance

    Why Manufacturers Need E&O Liability Insurance April 28, 2016

    Mention the term, “errors and omissions (E&O) insurance,” and most immediately think of specialized liability designed for professionals, such as accountants or lawyers. But any business that has a professional component to its products and services would be well served to consider E&O as a key building block of their liability protection.

    For example, manufacturers may feel their standard business liability will be more than adequate. After all, potential injury arising from their location or products is included. But consider the following actual claims and costs (judgment plus defense):

    • Due to an error in formulating the plastic, refrigerator door handles began to crack and come loose after a few months of use. Keenly aware of the impact that poor reviews of its refrigerators by consumer rating organizations would have on sales, the appliance manufacturer sued the injection molder for damages ($790,000).
    • The wrong type of polyester in hiking boots custom-created for a large retailer resulted in discoloration after a few months of use. The retailer sued for the financial impact on brand ($350,000).
    • A manufacturer’s special coating designed to reduce heat and friction on a gearbox — didn’t. This forced users to operate the gearbox at lower speeds who then sued for financial losses due to decreased production capability ($750,000).

    What do these types of claims have in common?

    1. All would be excluded by standard business liability, as there was no direct bodily injury or property damage.
    2. All the costs cited would have come out of the manufacturers’ own pockets.

    Don’t wait for the claim. Find out now if you potentially have major gaps in your liability protection. Talk with a Brunswick Companies expert today about Risk Management and what we can do to help your business by calling 800-686-8080.

    Reblogged with permission from Selective Insurance Group, Inc. Brunswick Companies is an independent insurance agency representing only A Rated carriers. We value our carriers’ investments in research and proudly share their market insights.