In addition, your excess liability carrier should provide dedicated, specialized claims management and excess liability coverage that includes expenses of a public relations or crisis management firm. These features can play a vital role in sustaining the health and viability of your business.
Whether you’re purchasing excess liability insurance for the first time or looking to increase your coverage, here are six key questions to consider.
“There’s a very real potential for a large verdict against a manufacturer,” according to Trish Carpenter, AVP, Regional Operating/Underwriting Officer at Travelers. For example, manufacturers of component parts are especially vulnerable to products liability claims. If your component parts go into another firm’s product, you could be included in a bodily injury or property damage claim as a contributing cause of the loss. Conversely, when using another firm’s components in your products, you may have liability exposure if you don’t have a contractual risk transfer agreement in place.
The costs of responding to and defending a products liability claim may exceed your primary insurance coverage limits, which could be financially devastating to your business. Excess liability coverage is designed to help cover the gap.
While most manufacturers face an array of exposures that might lead to expensive litigation, these products may carry higher risk:
It’s important for manufacturers to consider excess liability insurance. If your industry segment is high-risk, ask your insurance agent about a carrier that can issue a policy with higher dollar limits and provides extensive claim management and mitigation services.
If your product is alleged to have caused widespread bodily injury or property damage, it may be featured in local or even national media coverage. This could harm your brand and your business. “We’ve seen it over and over again,” said Carpenter, who suggests paying attention to lawsuits in your industry that may influence future litigation.
Crisis management service expenses coverage may be part of your excess liability insurance policy. It pays for certain expenses for public relations or crisis management services that can help mitigate negative publicity from unexpected crisis events.
Advanced manufacturing technology is evolving to become more complex and interconnected. With this ongoing transformation, new liability risks continue to emerge:
If your business owns or uses automobiles to distribute your products, excess liability insurance adds crucial protection. An employee-related car accident caused by distracted driving can bring a multimillion-dollar lawsuit. And the more vehicles in your fleet, the greater the risk.
Using a third party to deliver or distribute your products may reduce your risk exposure. However, you may still be exposed – in excess of your current policy limits – if the third party doesn’t carry enough liability insurance. For example, your company could be responsible for an accident if you chose the driver’s routes and determined how the goods were to be delivered by the driver.
A merger or acquisition is a good time for a manufacturer to reassess exposures and increase excess liability coverage limits. “Sometimes manufacturers aren’t aware of liabilities they might have taken on when they acquired a new company,” said Carpenter. For example, though your business may not have been involved in manufacturing the original product, it could still face liabilities from the acquired firm’s discontinued products.
As you’re deciding on the amount of coverage to buy, keep in mind that your broker or agent must evaluate your company’s risks and liabilities to determine what is appropriate to cover the risks. According to Carpenter, factors used by insurance professionals to determine how much excess liability coverage you need include:
Another factor is the size and product reach of your company.
The larger the business, the larger the exposure.
Trish Carpenter, AVP, Regional Operating/Underwriting Officer at Travelers
Beyond having more employees, facilities and product lines, bigger companies frequently have national and global reach, making them subject to a wide variety of laws and regulations.
Whether the business is small, medium or large – and depending on the type of products it manufactures – each has different coverage needs. When selecting an insurance carrier, be sure it has deep experience working with companies of your size and in your industry, as well as the size you expect to grow to in the future.
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In the event of a major claim or class-action litigation, excess liability insurance can help safeguard your company’s financial health. The Travelers Excess Liability team specializes in supporting manufacturers of all sizes and risk levels – even when your primary policy is with another carrier.
From small firms to large corporations, we offer national and global coverage, high-dollar limit capacity and expert services designed to protect your company and brand.
Here are our five reasons why suppliers should undergo an annual audit.
Undergoing an audit encourages suppliers to improve their business operations on a regular basis and step up their game each year.
As part of the audit process, Achilles’ qualified assessors validate everything from on-site accident records to ensuring organisations have a valid corporate social responsibility policy. So knowing that we’ll be visiting should provide you with the nudge you need to take action to ensure that your organisation has the right documentation and practices in place.
In fact, our internal research shows that after an organisation has undergone four years of our supplier audits, incidents of non-compliance with health and safety legislation decreased by an average of 73 per cent.
Additionally, we know that buyers are paying attention to organisations’ audit results, especially monitoring that they are improving year on year as they implement continuous improvement plans. Just like buyers need to step up their game, they are expecting suppliers to do the same. .
Audits can be pretty daunting, but if all of a supplier organisation’s operations are in order, there won’t be anything to worry about.
Many buying organisations need to complete more thorough due diligence on their supply chains due to increased legislation for example, which means those suppliers who are more proactive in taking steps to provide evidence of further evaluation could gain a competitive edge. What’s more, buyers will be able to see that the organisation is a progressive company that’s constantly looking to improve and stand out from the crowd, consequently increasing its competitiveness and providing buyers with peace of mind.
Having undergone an audit also demonstrates to buyers that a supplier is committed to carrying out their contract in an efficient and compliant manner.
However, it doesn’t just show that the supplier is committed to a single supply chain contract, it demonstrates that they are ready to do a good job on every contract and that they want to provide their services to the industry as a whole, not just one buyer.
As a result, relationships with buyers are more likely to be a positive and successful, making it easier for suppliers to collaborate and deliver services in line with the buyers’ expectations, once again minimising risk, if not eliminating it completely.
Aside from boosting a supplier organisation’s reputation, it’s highly likely that top priority will be given to increasing a company’s revenue and adding value to the brand over the long term.
Many of our customers report that undergoing an audit provides them with business improvements and increased business opportunities!
On the whole, it boils down to the fact that there is a requirement to impress buyers to win more supply chain contracts.
In some communities, buyers have minimum scores or levels of compliance that they want suppliers to have achieved when selecting contractors for their opportunities or projects. For example, those who have undergone Achilles UVDB Verify, this level is normally set around 75 per cent.
Get in touch with Achilles today to learn more about how our supplier audit could benefit your business or watch our video to learn more about how to prepare for an audit.
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