Product Liability Insurance

1. Product Liability Insurance Stephen R. Jordan President

2. Jordan & Jordan Insurance Group, Inc. Agenda • What is Product Liability? • Legal premises for Product Liability • Why the need for Product Liability Insurance • Outline of the insurance Process • Q & A www.jordanjordaninsurance.com

3. PRODUCT DEFINITION • Products’ production, marketing, distribution • Any and all packages, containers, parts, and accessories. • Any and all instructions, labels, warnings, warranties, marketing, and advertising information that is related to the products. www.jordanjordaninsurance.com

4. PRODUCT LIABILITY • Legal liability incurred by a manufacturer, merchant, or distributor because of injury or damage to a third party resulting from the use of their product. www.jordanjordaninsurance.com

5. PRODUCT LIABILITIES(CAUSES FOR LIABILITIES) • Errors in design • Errors in production • Inadequate instruction/ Inaccurate product label • No Warning Labels www.jordanjordaninsurance.com

6. LEGAL PREMISES FOR PRODUCT LIABILITIES • Legal Premises are different for every state, very high rate of law suits ( law suits include trial by jury, monetary punishment, bilateral responsibility, public cognition) • Involving the responsible partyAny and all production, all premises for marketing, including the manufacturer, merchant, and distributor that is related to the product www.jordanjordaninsurance.com

7. AREAS OF COVERAGE(Things that constitutes monetary damages) • Medical Expenses • Reduction In Income • Bodily Injuries • Emotional Injuries • Punitive Damages www.jordanjordaninsurance.com

8. Trend of Million Dollars Indemnity www.jordanjordaninsurance.com

9. SERIOUS CONSEQUENCES RESULTING FROM PRODUCT LIABILITIES • Long-term Investigations • Lengthy ruling period • High medical and other expenses • High Lawyer expense • Loss of privileges and controls • Unpredictable financial effects • Bad reputation for the product • Damages to the market share • Inability to secure additional distributors www.jordanjordaninsurance.com

10. CHARACTERISTICS OF RISKS IN PRODUCT LIABILITIES • (IBNR) Incurred But Not Reported • Long Tail Exposure www.jordanjordaninsurance.com

11. HOW TO MANAGE PRODUCT LIABILITY RISKS • Avoid risks • Undertake risks • Pass the risks to someone else • Buy Insurance against risks www.jordanjordaninsurance.com

12. Product Liability Insurance • Protection against financial loss arising out of the legal liability incurred by a manufacturer, merchant, or distributor because of injury or damage to a third party resulting from the use of a covered product. www.jordanjordaninsurance.com

13. AREAS OF COVERAGE(During the policy period, and within the contract) • Legal liability incurred because of injury or damage to a third party resulting from the use of the covered product • Litigation Fees www.jordanjordaninsurance.com

14. AREAS OF COVERAGE(Policy Period) • Occurrence Policy All incidents must happen within the policy period. • Claim Made PolicyAll incidents must be happen within a policy time and reports have to be made in the policy period. www.jordanjordaninsurance.com

15. BASICS OF EXCLUDED LOSSES • Purposeful acts • Owner’s Liability • Contamination • War and or acts of war • Unauthorized changes to the product www.jordanjordaninsurance.com

16. THINGS THAT AFFECT THE INSURANCE RATES • Total Insurance Price = Total Sale Amount x Rates • Things that determine Insurance RatesQuality & Risks of the productLiability Amount and DeductiblesMarketing/Distribution AreaType of coverage Special endorsementsGross sales amount www.jordanjordaninsurance.com

17. WHY PURCHASE PRODUCT LIABILITIES INSURANCE? • When exports are made to an area where the law is uncertain and is effecting the product • When it is impossible to successfully avoid all liability risks • To protect the products’ reputations • To protect the exportation market • To maintain stable monetary conditions • To meet the need of the countries of imports www.jordanjordaninsurance.com

18. CONSIDERATIONS BEFORE INSURANCE PURCHASE • Financial ratings of the Insurance Company • When processing claims (consider the location and the prevailing laws where the product is being sold) • Policy covered area and the prevailing laws • Types of coverageOccurrence form Claim made form • International acceptance of the Insurance Policy- ISO Insurance Policy www.jordanjordaninsurance.com

19. How can you save on your insurance premiums. • Build a great product!! Document your quality control and R&D procedures. • Show compliance with all industry standards and government regulations. • Have a product recall plan in place. • Show that your suppliers have purchased insurance and have you name as additional insured. www.jordanjordaninsurance.com

20. How can you save on your insurance premiums-Continued • Self-Insurance • No Insurance • Insurance with a high deductible (100K to 250K). Must have stable financials. • Do not insure products with a low risk classification. • Captives www.jordanjordaninsurance.com

21. How can you save on your insurance premiums-Continued • Hold Harmless Agreements • Have warranties and manuals review by legal counsel. • Create safety programs for the consumer. • Forecast your sales correctly!! • Make certain the agent knows your business. Pricing usually comes down to the relationship the agent has with the Insurance Company. www.jordanjordaninsurance.com

22. Why Partner with Jordan & Jordan? • 80% of our revenue comes from Product Liability Insurance. • Jordan & Jordan focuses on Manufacturers with large product exposures. • Jordan & Jordan now has an office in Qingdao, China. • We can assist companies in setting up a registered agent for insurance purposes. • Help develop loss prevention plans. • 24 Hour Service by web access or telephone support (English Only). www.jordanjordaninsurance.com

23. PROCESS OF PURCHASE www.jordanjordaninsurance.com

24. Q & A • At this time, please feel free to ask me any questions. www.jordanjordaninsurance.com