Traditionally manufacturers have been catered to by casualty policies, not seeing the need for a professional liability policy. However, as the manufacturing industry has evolved and their exposures are diversifying, this has lead to a spike in demand for manufacturer's professional (E&O) insurance.
There is a common misconception that E&O policies are strictly related to advice-giving professions, like accountants and engineers. While many professional liability policies are designed with those sectors in mind, they’re not only about covering bad advice. At their core, E&O policies are tailored to address third-party financial loss.
Gap in coverage
Third-party financial loss claims for manufacturers may not always be fully addressed by a general liability or product recall insurance policy, especially when the claim doesn’t involve traditional triggers like bodily injury or property damage. In such cases manufacturers can still face substantial costs, making comprehensive coverage an essential consideration.
General and products liability coverage protects against third-party claims for bodily injury and property damage caused by a product. However, it does not cover repair or replacement of faulty products or any consequential losses experienced by the user due to these faults.
Product recall is a first-party cover which reimburses the insured for the costs associated with the recall of a product. This coverage is typically triggered if the product has the potential to cause bodily injury or property damage rather than in response to third-party lawsuits or consequential losses suffered by the user.
Manufacturers professional (E&O) covers the third-party financial loss caused as a result of a manufactured product’s failure to perform its intended function. For example, failure of the product could be due to an error in the manufacturing process (human or technology) or from the use of defective materials. The policy rounds out the insured’s cover by giving broader protection.
Manufacturer's professional
CFC’s policy is built for manufacturers and designed with this sector specifically in mind. It combines E&O alongside optional cyber coverage, ensuring businesses aren’t left exposed to common risks during the normal course of business.
Our manufacturer’s professional also covers ancillary advice or services rendered in relation to the manufacturing of the product, pollution liability at third-party sites resulting from the manufactured product, media liability and intellectual property.
If you have any questions about E&O insurance for manufacturers, please get in touch with the US professions team by emailing professions@cfc.com.
