Product Guarantee Insurance

Providing protection when products fail to perform

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Why Product Guarantee insurance?

After a product has been handed over to the customer, Product Guarantee insurance will provide cover against the cost of replacing, reworking or recovering products that have failed to perform their intended function due to faulty design, manufacture or installation. This cover goes hand in hand with Financial Loss and Product Recall Insurance.

This cover exists because a Product Liability policy does not cover repair or replacement of faulty products, nor any consequential losses sustained by the user arising out of these faulty products.

This policy does not require injury or damage to have occurred (unlike a Product Liability policy) nor does it require the risk of injury or damage (unlike a Product Recall policy). It simply guarantees the product, as a ‘safety net’ for the quality management processes of the policyholder. The only requisite is that the product must have failed to perform its intended function.

Helping your business continue when your products fail

A product failing to perform the intended function can devastate a company’s brand name and profitability. A typical Product Guarantee Insurance policy, where Financial Loss and Product Recall cover is purchased, will provide cover for claims made during the relevant policy period.

The cover is an annually renewable policy consisting of:

  • Product Guarantee
  • Financial Loss
  • Product Recall

Claims Example:

A sprinkler installer has installed a perfectly functioning sprinkler system but it is not installed to the correct specification and therefore does not suppress a fire as intended – resulting in unexpected or greater than expected damage.

A Public/Products Liability insurer would not provide cover in this example as an inadequate product has been deliberately, albeit innocently, supplied and the product itself has not directly caused the loss or damage.

A Product Guarantee Insurance policy would respond.

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