1

MARKET AGREEMENT ON
RATING OF

PRODUCT LIABILITY RISKS

THE ORIENTAL INSURANCE COMPANY LTD.

Private And Confidential : Issued For

The Use Of Insurers Carrying On General Insurance
Business in India

MARKET AGREEMENT ON PRODUCT LIABILTY

The Market Agreement (hereinafter called the Agreement) lays down rules,
regulations, rates , advantages, terms and conditions, as contained herein, for
transaction of Product Liability Insurance business in India.
The Agreement extends to the whole of India.
I N D E X
Sl.No.
I.

Contents

Page No.

General Rules & Regulations

3-7

II.

Rating

8 - 11

III.

Exports

12 - 15

IV.

Classification of Risks

16 - 19

V.

Standard Policy Form

20 - 28

Endorsements

29 - 32

Standard Proposal Form

33 - 37

Risk Assessment

38 - 45

VI.
VII.
VIII.

PRODUCT LIABILTY AGREEMENT

Section I
GENERAL RULES AND REGULATIONS
1

Applicability

This Agreement applies to all Products Liability policies issued by Insures in India
with a maximum limit of indemnity of Rs 107.5 crores any one year /during the
policy period.
Exports to U.S.A/ Canada and other countries as provided in Section III
(Exports) may also be covered under Products Liability Policy provided (a)
domestic turnover of the Insured is covered and (b) rates, terms, conditions
excess etc., prescribed in Section III are compiled with.
Products Liability proposals with limits of indemnity in excess of Rs 107.5 crores
any one year/policy period shall be referred to the Market Agreement Committee
before acceptance to fix rates, terms and conditions.
2.

Effective date: This Agreement will come into force from 1.1.1988.

3.

Standard Proposals Form

Insurers shall obtain Proposal for Products Liability Insurance in the Standard
Proposal Form prescribed under this Agreement.
No cover shall be granted unless a declaration as provided for in the Proposal
Form is obtained from the Insured to the effect that all statuary requirements
relating to the business activities are compiled with.
4. Standard Policy Form
All Policies, fresh and renewal, issued under this Agreement shall be in the
Standard Policy Form prescribed hereunder.
5. Liabilities Covered
Policies issued under this Agreement cover all sums, which the Insured shall
become legally liable to pay as damages in consequence of accidental
death/bodily injury or disease to Third Parties and/or loss of or damage to Third
Party property arising out of any defect in the products manufactured and covered
under the Policy after such products have left the Insureds premises.
It shall not be permissible to issue Product Liability Policies with unlimited
liability.

6.

Classification of Risks

For the purpose of this Agreement, Industries are classified into seven Groups
as at Pg. 12.
Where the risks cannot be classified into any of these seven groups, the
Companies may rate such risks by using the Market Agreement as guideline for
like or similar risks:. In respect of risks for which there are no guiding Market
Agreement provisions, the same may be rated by the Companies at their end
without reference to GIC / Market Agreement Committee. Details of such
proposals, however, are to be sent to GIC for information only.
7.

Premium

The rates of Premium under this Agreement are annual rates based on
i) the annual gross turnover and
ii) the limit of Indemnity any one-year as specified in Section II (Rating).
The premium rates stated in Section II are applicable to domestic sales only.
When exports are covered under the Policy, additional premium as per Section III
along with its other provisions shall also be applicable
The Turnover under the Policy has to be accurately assessed and declared by the
Insured at inception as far as possible. However, in case the Insured anticipates
any increase in turnover during the Policy period such anticipated increase in
turnover shall be immediately notified to the Company and additional premium
paid therefor. Under no circumstances it shall be permissible to adjust the
premium for the turnover on expiry of the Policy .In case the Insured anticipates
any decrease in turnover during the Policy period such anticipated decrease in
turnover shall be considered by the underwriting office at its discretion and
downward adjustment in premium made accordingly.
8. Revision in Limit of Indemnity
Mid- term increase decrease in the limits of indemnity limit during the currency of
the Policy period will be at the discretion of the Head office of the Company.
Whenever changes in indemnity limits are agreed to the revised retroactive date
showing indemnity limits available at various dates shall be incorporated in the
Policy Schedule.
If Insured wish to seek protection for anticipated liability in excess of available
limits of indemnity for past periods due to different retroactive date, the Company

5
may consider granting of run off covers based on merits of each case. Raters,
terms and conditions for such run off covers may be finalised by the Companies
and if necessary they may consult their reinsurers.
9. Compulsory Excess
All Policies issued under this Agreement shall be subject to a Compulsory Excess
of 0.5 per cent of the limit of indemnity per any one accident subject to a
minimum of Rs 2000/- and maximum of Rs 3.0 lakhs. The Insured shall bear this
compulsory excess, which is applicable to both property damage claims, and
death/bodily injury claims inclusive of defence .pa
costs arising out of any one accident. For exports to U.S.A / Canada, the
Compulsory Excess shall be as specified in Section- III.
10. Voluntary Excess (Deductibles)
The following discounts on the premium may be allowed for Voluntary Excess
opted by the Insured.
The Voluntary Excess shall be in addition to the compulsory excess and shall be
applicable to both property damage claims and / or death / bodily injury claims
inclusive of defence costs arising out of any one accident.
Voluntary excess percentage of
Limit of indemnity per any one accident
1%
2%
4%
6%
8%
10%

11.

Discount
2.5%
5.0%
7.5%
10.0%
12.5%
15.0%

Shorts Period Premium

It shall not be permissible to issue policies for periods more than 12 months.
The following short period scale of premium shall apply to
i) policies issued for periods less than 12 months and
ii) policies cancelled during the currency at the request of the Insured
subject to no claim.

6
Period

Rate

(Not exceeding)
1 week
10% of the Annual rate
1 Month
25% of the Annual rate
2 Months
35% of the Annual rate
3 Months

50% of the Annual rate

4 Months
60% of the Annual rate
6 Months.
.75% of the Annual rate
8 Months
85% of the Annual rate
Exceeding 8 Months
Full Annual Premium

12.

Vendors Liability Extension

It shall be permissible to grant only Limited Vendors Liability extension

under the Policy covering exports as per the Vendors Clause annexed subject to
charging additional premium as below: (a) For Named Vendors

(b) For unnamed Vendors

5 pct of the premium on Limits

of Indemnity plus export turnover
Premium.
:

10 pct of the premium on Limits

of Indemnity plus export turnover
premium.

12 A
In respect of products not manufactured by the Insured but
manufactured by Sub-Contractors and / or Loan & Licence Manufactures on
their own brand name the same can be covered under the Products Liability Policy
with the following additional information / particulars for acceptance.
Copy of Agreement between Contractor / Sub- Contractor /Loan License
Manufacturer and the Insured.
If suppliers have Product Liability
If so, name of Insurer and Limit of Indemnity granted.
After considering the relevant factors, the Companies may charge minimum
additional premium of 10% of the Indemnity premium plus Turnover premium

7
on products manufactured by third parties.
13.

The limits of Indemnity under the policies issued under this Agreement
shall be expressed in Indian Currency only. Settlement of claims also shall be
Indian currency.
Proposals for issuance of policies with limits of indemnities expressed in
foreign currency as well as for settlement of claims in foreign currency have a
blanket approval of the Reserve Bank of India, Bombay vide their letter Ref. No.
EC / CT .70 / 45 (A) 88 / 89 dated 1.9.1988.
14. Retroactive Date
Retroactive date is the date when the risk is first incepted under a claims
made Policy and thereafter renewed without break in the period of cover.

PRODUCT LIABILITY AGREEMENT

SECTION II
RATING
A.

On Turnover

Where the Limit of Indemnity per any one year is Rs. One lakh or below,
the following minimum rates shall be applied on the previous years actual gross
annual turnover or the current years projected annual turnover whichever is
higher. The term Turnover shall mean annual gross sales including all taxes and
levies.
TABLE-I
RISK GROUP
1
2
3
4
5
6
7

MINIMUM RATES
(per mille)
0.03
0.05
0.07
0.09
0.11
0.13
0.15

B. On Limits of Indemnity - Any One Year

Where the limit of indemnity any one year exceeds Rs. 1,00,000/- and the ratio
of any one accident to any one year is 1:1 premium as per the following Table
shall be charged in addition to the premium based on Turnover as above.

TABLE-2
(Where Ratio of limit of Indemnity per Any One Accident
to Any One year is 1:1)
Limit of Indemnity
Any One Year

Rate / Premium

Upto Rs. 2 Lakhs

Rs. 1,000 (minimum)

Exceeding Rs. 2 lakhs but not

exceeding Rs 10 lakhs

Rs. 1,000 + 2.25 per mille

on the excess of Rs. 2 lakhs

Exceeding Rs. 10 lakhs but not

exceeding Rs. 25 lakhs

Rs. 2,800 + 2.15 per mille

on the excess of Rs. 25 lakhs

Exceeding Rs. 25 lakhs but not

exceeding Rs. 50 lakhs

Rs. 6,025 + 2.00 per mille

on the excess of Rs. 50 lakhs

Exceeding Rs. 50 lakhs but not

exceeding Rs. 100 lakhs

Rs. 11,025 + 1.80 per mille

on the excess of Rs. 50 lakhs

Exceeding Rs. 100 lakhs but not

exceeding Rs. 150 lakhs

Rs. 20,025 + 1.60 per mille

on the excess of Rs. 100 lakhs

Exceeding Rs. 150 lakhs but not

exceeding Rs. 200 lakhs

Rs. 28,025 + 1.40 per mille

on the excess of Rs. 150 lakhs

Exceeding Rs. 200 lakhs but not

exceeding Rs. 250 lakhs

Rs. 35,025 + 1.25 per mille

on the excess of Rs. 200 lakhs

Exceeding Rs. 250 lakhs but not

exceeding Rs. 300 lakhs

Rs. 41,275 + 1.10 per mille

on the excess of Rs. 250 lakhs

Exceeding Rs. 300 lakhs but not

exceeding Rs. 400 lakhs

Rs. 46,775 + 1.00 per mille

on the excess of Rs. 300 lakhs

Exceeding Rs. 400 lakhs but not

exceeding Rs. 500 lakhs

Rs. 56,775 + 0.90 per mille

on the excess of Rs. 400 lakhs

Exceeding Rs. 500 lakhs but not

Rs. 65,775 + 0.80 per mille

10
exceeding Rs. 600 lakhs

on the excess of Rs. 500 lakhs

Exceeding Rs 600 lakhs but not

exceeding Rs. 700 lakhs

Rs. 73,775 + 0.70 per mille

on the excess of Rs. 600 lakhs

Exceeding Rs. 700 lakhs but not

exceeding Rs. 800 lakhs

Rs. 80,775 + 0.60 per mille

on the excess of Rs. 700 lakhs

Exceeding Rs. 800 lakhs but not

exceeding Rs. 900 lakhs

Rs. 86,775 + 0.50 per mille

on the excess of Rs. 800 lakhs

Exceeding Rs. 900 lakhs but not

exceeding Rs. 10775 lakhs

Rs. 91,775 + 0.40 per mille

on the excess of Rs. 900 lakhs

The following premium on Limit on Indemnity any one year shall be charged where the ratio of Limit of
Indemnity per any one accident to any one year are as specified below:
Ratio AOA: AOY

Premium

1:1
1:2
1:3
1:4

100% of the above Table 2

80% of the above Table 2
70% of the above Table 2
60% of the above Table 2

C. Steps for computing Premium

For domestic cover only
(i)

Premium on Turnover
Premium rate depending upon the category of risk group to be charged on the total turnover as per
Table 1

(ii)

Premium on Indemnity
Premium on limit of indemnity per any one year is to be charged as provided for in Table 2 by
suitably adjusting for ratio of AOA: AOY selected
iii)

Total Gross Premium

Total gross Premium chargeable will be (i) + (ii) above

11
ILLUSTRATION -1
Product Liability Insurance Domestic Cover
Risks Group
Limit of Indemnity

4
Rs 75,00,000 AOA
Rs 300,00,000 AOA

Therefore ratio of AOA to AOY

1:4

Turnover

Rs. 80 Crores

Premium on Turnover
(Rs. 80 crores X 0.09 p.m.)

Rs. 72,000

Premium on Indemnity Limit

of Rs. 3 crores
(Rs. 46775 X 60%)

Rs. 28,065

Total Premium

--------------Rs. 100,065
---------------

12

PRODUCT LIABILITY
Section-III
EXPORTS
1. No Policy shall be issued for covering exports only, unless the domestic sales are also
covered
under the Policy.
2.

For the purpose of this Section, various countries are classified as under:
Category I

U.S.A and Canada

Category II

OECD countries as under;

Countries belonging to the Organization for
Economic Co-operation and Development viz.
Austria, Belgium, Denmark, Finland, France
Germany, Great Britain, Greece, Iceland,
Ireland, Italy, Japan, Luxemburg, Netherlands,
New Zealand, Norway, Portugal, Spain, Sweden
Switzerland, Turkey and Yugoslavia.

Category III

Other countries including non OECD Countries.

The additional Premium for Exports shall be arrived at as under:

(1)
(2)

All the countries of Exports shall be grouped into 3 categories as defined above.
Total Exports Turnover for each category of countries as defined above shall be
ascertained.

(3).

The basic Premium rate as per Section II- A to be applied on Total Export Turnover
separately for each category of countries.

(4)

The Premium so arrived at ( as per 3 above ) and multiplied by the following

multipliers will be the Premium on Turnover .

13
Category of country
I
II
III

Multiplier
15
5
2

(5)

The Premium calculated as per Section II B and multiplied by the highest

multiplier (applicable on the basis of the categories of countries of exports
attracting highest multiplier) will be the Premium on Indemnity . When export s
are involved premium on indemnity shall not be charged again for domestic
sales.

(6)

Total of 4 and 5 will be the total additional premium for exports.

(7)

The additional premium for exports so arrived at shall be added to the domestic
sales premium on Turnover only ( as per Section II- A ) to arrive at the total
gross premium under the Policy.
3. For covering exports to U.S.A and Canada ,the North American Jurisdiction Extension
Clause shall be applied
4. . Compulsory Excess
All Policies covering exports to U.S.A and Canada shall be subject to Compulsory Excess
of 1.0% ( instead of 0.50 % as per Section I , Reg . 9 ) of the limit of Indemnity per
any one accident subject to a minimum of Rs. 4000/- and a maximum of Rs. 6 lakhs .
. This Compulsory Excess shall apply to both property damage claims and
death / bodily injury claims, inclusive of defence costs , arising out of any one accident .

14

ILLUSTRATION
Products Liability Insurance including exports
Risks Group
Limits of Indemnity

4
Rs 1 Crore AOA
Rs 2 Crore AOY

Ratio AOA to AOY

1:2

Turnover

i) Rs 75 crores Indian
ii) Rs 5 crores USA/Canada
iii)Rs 7 crores OECD countries
iv)Rs .10 crores Non -OECD excl. India

Computation of Premium
A.

1) Premium on Indian turnover

(Rs 75 crores X 0.09 pm)
2) a)
b)

Premium on USA/Canada Turnover

(Rs .5 crores X 0.09 pm)
Loaded Premium (depending
on multiplier factor )
(Rs 4500 X 15)

3) a) Premium on OECD turnover

(Rs .7 crores X 0.09 pm)
b) Loaded Premium (depending
on multiplier factor )
(Rs 6300 X 15)
4) a)

Premium on Non-OECD countries

(Rs .10 crores X 0.09 pm)

b) Loaded Premium (depending

on multiplier factor )
(Rs 9000 X 2)
Total Turnover Premium

Rs 67,500
Rs 4,500
Rs 67,500

Rs 6,300
Rs 31,500

Rs 9,000
Rs 18,000
--------------Rs. 184,500
=========

15

B. a)
b)

Premium on Limit of Indemnity of Rs 2 crores

(Rs 35025 X 80% i.e. Rs 28020)
Loaded Premium (Rs 28020 X 15 )
Total Premium (A+B)

Rs 420,300
----------------Rs 604,800

Indemnity Premium is loaded by 15 times being the highest loading factor applicable in respect of
exports to USA / Canada
Note :
1) Additional Premium for Vendors Liability Extension, wherever applicable, shall be charged as
per General Regulation 12, of the Agreement.
2) Inclusion of Technical Collaborators Liability
If desired by the Insured, the underwriting office may consider granting of Technical
Collaborators extension. Before granting such extension the matter may be referred to
reinsurers when the risk is ceded under the automatic reinsurance facility or reinsured
facultatively. In respect of risk which does not require reinsurance such extension may be
granted by the Companies after fixing terms and conditions at their end.
It is necessary for the underwriting office to scurtinise the copy of agreement between the
Collaborators and the Insured and details of global liability policy of the Collaborator(s).
Other additional information for proper understanding of the nature of risk may be called for
depending on the need of each case

16

LIST OF PRODUCT GROUP

Product
Group
Advertising Signs
2
Agricultural Implements and
Farm Machinery
4
Air Conditioning Units & Ducts
5
Alcoholic beverages
2
Ammonia
4
Ammunition, Explosives & Fireworks
7
Animal & Bird Foods (prepared)
4
Baby Carriages
2
Bags & Sacks (other than Plastic or leather) 1
Baths and Basins
2
Batteries
1
Bearings
5
Beer Drawing Equipment
2
Beverages (Tea and Coffee)
2
Blinds, Awnings, Tents & Canvas
1
Boats (Small Craft)
5
Bread, Cakes and Biscuits
3
Bricks
2
Brooms and Brushes
1
Builders Hoist Towers
3
Building Materials (Structural)
-4
Caravans and Trailers
4
Carpets
1
Castings and Forgings
2
Cast Iron Products
6
Castors
4
Caustic Soda
4
Cement and Concrete Products
4
Chemical Products
5
Cigarette Filters
4
Clocks and Watches
1
Clothing (other than Protective & Life Support)2
Clothing Protective & Life support)
5
Compressors
5
Concrete Pumping Equipment
4
Confectionery
3
Conveyors (Earth Moving)
3
Conveyors (Pressure Type)
3
Conveyors (screw & Bucket Types)
3
Cosmetics & Toilet Preparations
5
Crockery & Pottery
2
Cutlery
2
Cycle (Pedal) Accessories
2

Product
Electrical Applicances-Domestic
(excluding Electric Blankets)
Electric Magnetic Relays
Ethyl Benzene
Ethyl Dichloride
Excavators
Fans (domestic)
Fans (Large Industrial)
Felt and Felt Products
Fertilizers
Fibreglass
Firearms
Flour Mill &Cereal Products
Food Processing Machinery
Food Products N.O.C.
Fork Lift Trucks
Front End Loaders
Fruit and Vegetable Products
Furniture
Fuses
Garden Tools
Gas or Oil Appliances (Domestic)
Glassware
Glass Wool & Mineral Wool Products
Grinding Machines
Guillotines
Gymnasium Equipment
Hand Tools ( No Power)
Hand Tools (Power)
Heating and Air Conditioning
Heating Appliances Domestic
(other than Electric, Gas or Oil)
Heating Elements
Inorganic Chemicals N.O.C.
Industrial Gases
Jewellery
Kitchenware
Ladders
Leather and Leather Products
Life Jackets
Lift and Elevators
Light Fittings
Lockseaming Machines
Locks

Group
5
4
4
4
4
2
5
1
4
4
7
3
3
4
3
4
3
2
5
2
5
2
2
3
3
3
2
5
5
5
5
4
5
1
2
7
3
5
5
5
3
2

17
Drapery
Dyestuffs
Earth Moving Equipment
Eearth Moving Equipment Parts
Electric Blankets
Electric Contacts

2
4
4
4
5
4

Margarine, Oils and Fats N.O.C.

Marine Freight Container
Materials handling Equipment-N.O.C.
Mattresses
Measuring Professional and Scientific
Equipment

3
5
3
2
4

18

Product
Meat Products
Metallic Flexible Hoses & Couplings
Methylated Spirits
Meteorological Equipment (Electrical)
Milk Products
Motor Vehicles
Motor Vehicle Accessories
Motor Vehicle Component Parts
excluding Tyres, Tubes, Electrical components,
Tow Bars and Pack Racks)
Motor Vehicle Engine Reconditioning
Motor Vehicle Tyres, Tubes,Tow Bars & Pack
Racks
Motor Vehicle Electrical Components
Non-Ferrous Metals
Non-Metallic Mineral Products
Nuts and Bolts
Office Equipment (No Power)
Ophthalmic Articles (including glass & Lens)
Optical Goods (non-glass)
Organic Chemicals N.O.C.
Paint and Varnish
Paper
Pens, Pencils and Marking Equip.
Pesticides
Petroleum Products
Phenyle
Pharmaceutical Produc ts
Photographic Equipment
Pipes (Steel)
Plaster Products
Plastic Goods (Other than Containers, Insulating,
Wrapping & Packing Materials
Plastic Goods (Containers, Insulating, Wrapping
& Packing Matrials)
Plastic Moulds
Pressure Cookers
Printing Products
Protective Clothing
Pumps
Railway Signalling Equipment
Refrigeration
Rollers (for handling heavy equipment)
Rope (Non-Metallic)
Rubber Goods (Insulating)
Rubber Goods (Other than Motor Vehicle Tyres,
Tubes and

Group
3
4
4
3
3
4
4
4
4
6
4
2
4
3
2
5
2
4
4
1
1
7
5
7
5
2
5
3
2
5
3
4
3
5
5
5
5
4
6
4

Product
Insulating materials)
Saw Mill Products
Scaffolding (Metal)
Screws and Rivets
Sheet Metal Furniture
Sheet Metal Products
Silverware and Plate
Soaps and Detergents
(including Shampoos)
Soft Drinks & Cordials
Sporting Goods (Other than Firearms,
Underwater and Aerial Equipment)
Springs (Furniture)
Springs (other than furniture)
Steam Boilers and Turbines
Stone Crushing Machinery
Street Lighting Poles
Switchboards and Switchgear
Switches
Taps
Teeth Artificial
Textile Fibres, Yarns and Woven
Fabrics N.O.C.
Ticket Printing Machines
Tiles
Tabacco Products
Toys
Transformer Equipment
Transformers
Transformers (for Fluorescent Lights)
Transmission Line Insulators, Surge
Diverters, Instrument Transformers,
Power Line Carrier Communication
(PLCC) equipment etc.
Turnstiles
Voltage Equipment
Washers (steel)
Water Heating Systems
Waterproofing Compounds & Cement
Welding Equipment
Winches, Lifting Jacks & Hoists
Wire (including Wire Rope)
Wire Products (Mesh & Chain)
Wire Staples
Wire Tying Machines
Wood Products N.O.C.
Woolen Goods

Group
2
3
7
3
2
2
1
5
3
4
1
3
5
4
2
5
5
2
2
3
3
2
3
4
3
5
2

6
2
3
3
5
4
4
4
6
6
3
3
4
2

19
Woodworking Machinery
Wrought Iron
N.O.C. means NOT OTHERWISE
CLASSIFIED

3
4

20

THE ORIENTAL INSURANCE CO. LIMITED

Products Liability Policy

1. OPERATIVE CLAUSE :
WHEREAS the Insured named in the Schedule hereto and carrying on the
business described in the said Schedule has applied to THE CO.
LIMITED (hereinafter called the company ) for the indemnity hereinafter
contained and has made a written Proposal and declaration which shall be the
basis of this contract and is deemed to be incorporated herein and has paid the
Premium as consideration for or on account of such indemnity .
NOW THIS POLICY WITNESSETH that subject to the terms exceptions and
conditions contained herein or endorsed hereon the Company will indemnify
the Insured against their legal liability (other than liability under the Public
Liability Insurance Act ,1991 or any other statue that may come into force after
the issue of this Policy ) to pay compensation including Claimants costs , fees
and expenses anywhere in India , in accordance with the law of the country but
not in respect of any judgment ,award payment or settlement made within
countries which operate under the laws of the United States of America or
Canada (or to any order made anywhere in the world to enforce such
judgment , award or settlement either in whole or in part ) unless the Insured
has requested that there shall be no such limitation and accepted the terms of
North American Jurisdiction Extension Clause which forms part of this Policy
2. INDEMINITY :
The Indemnity only applies to claims arising out of accidents during the period of
insurance first made in writing against the Insured during the Policy period and
the Insured is indemnified in accordance with the Operative Clause for and/or
arising out of Injury and /or Damage but only against claims arising out of or in
connection with the business specified in the Schedule .
For the purpose of determining the indemnity granted
a) Injury means death, bodily injury, illness or disease of or to any person;.
b) Damage means actual and/or physical damage to tangible property;
c) Pollution means pollution or contamination of the atmosphere or of any water
land or other tangible property;.
d) Product means any tangible property after it has left the custody or control of
the Insured, which has been designed, specified, formulated, manufactured,

21
constructed, installed, sold, supplied, distributed, treated, serviced, altered or
repaired by or on behalf of the Insured ;
e) Policy Period means the period commencing from effective date and hour as
shown in the Policy Schedule and terminating at midnight on the expiry date as
shown in Policy Schedule;
f) Period of Insurance means the period commencing from the retroactive date
and terminating on the expiry date as shown in the Policy schedule .
g) Accident shall means a fortuitous event or circumstance which is sudden,
unexpected and unintentional including resultant continuous, intermittent, or
repeated exposure arising out of the same fortuitous event or circumstance.
3. a)
NOTIFICATION EXTENSION CLAUSE :
Should the Insured notify the Company during Policy period in accordance with
General Condition 9.1 of any specific event or circumstance which the Company
accepts may give rise to a claim or claims which form the subject of indemnity
by this policy, then the acceptance of such notification means that the Company
will deal with such claim or claims as if they had first been made against the
Insured during the Policy period . The extension under this Clause will be subject
to the maximum. time limit laid down under the Indian Limitation Act in force
from time to time.
b)

EXTENDED CLAIM REPORTING CLAUSE :

In the event of non renewal or cancellation of this Policy, either by the Company
or by the Insured , the Company will allow a time limit not exceeding 90 days from
date of expiry or cancellation of the Policy provided no insurance is in force during
this extended reporting period for the same interest , for notification of claims for
accidents which had taken place during the period of insurance but could not be made
during the Policy period , provided, however , all claims made during the extended
reporting period shall be handled as if they were made on the last day of the
expiring Policy period and shall be subject to the Limit of indemnity , terms,
conditions and expectations of the policy .
This extended reporting period does not in any way reinstate or increase the limit of
indemnity mentioned in the Schedule of the Policy
4. INDEMINITY TO OTHERS:
The Indemnity granted extends to ;

22
4.1

officials of the Insured in their business capacity arising out of the

performance of their business or in their private capacity arising out of
their temporary engagement of the Insureds employees;

4.2 the Officers , Committees and members of Insureds , canteen, social,

sports, medical, fire fighting and welfare organizations in their respective
capacities as such;
4.3 the personal representatives of the estate of any person who would
otherwise be indemnified by this Policy but only in respect of Liability
incurred by such person .
provided always that all such persons or parties shall observe, fulfil and be
subject to the terms, conditions and exclusions of this Policy as though they
were the Insured .

5. CROSS LIABILITIES:
Each person or party indemnified is separately indemnified in respect of
claims made against any of them by any other person or party (other than the
name Insured ) subject to Companys total liability not exceeding the limits of
indemnity stated in the schedule of the Policy.
6. DEFENCE COSTS:
The Company will pay all costs,fees and expenses incurred with their prior
consent in the investigation, defence or settlement of any claim made against
the Insured and the costs of representation at any inquest, inquiry or other
proceedings in respect of matters which have a direct relevance to any claim
made or which might be made against the Insured , provided such claim or
claims are subject of indemnity by the Policy. Such costs, fees and expenses
are called Defence Costs
7. INDEMNITY LIMITS :
Companys total liability to pay compensation, Claimants costs fees and
expenses and defence costs shall not exceed the Indemnity limit stated in
the Schedule . Indemnity Limit applies to any one claim or series of claims
arising from one originating cause. Indemnity Limit shall represent the
total amount of Companys Liability during the Policy period.
7.1 CLAIMS SERIES CLAUSE

23
A Claims Series Event as defined below shall be deemed to be one claim and
date of loss shall be the date when the first claim of the Claims Series Event is made
in writing against the Insured.
A Claims Series Event shall be defined as a series of two or more claims arising from
one specific common cause, which is attributable, e g
- to the same fault in design, manufacture, instruction for use or labelling of
products
- or to the supply of the same products and/or services or to Products and/or
service showing the same defect .

There shall, however, be no coverage for claims arising from one specific cause
,which are made later than 3 years after the first claim of the series .
7.2

COMPULSORY EXCESS :
The Insured shall bear a Compulsory Excess of % of the limit of
indemnity per any one accident subject to a maximum of Rs 1,50,
000 /-. .This Compulsory Excess shall applicable to both (a) death/bodily
injury (b) property damage , inclusive of defence costs arising out of any
one accident . The Companys liability shall attach for the claim in excess
of such Compulsory Excess (and voluntary Excess , if any , opted by the
Insured )

7.3

VOLUNTARY EXCESS :
In the event of the Insured opting , the Policy shall be subject to voluntary
excess as mentioned in the Schedule . This voluntary excess shall be
applicable to both (a) death/bodily injury claims and (b) property damage
claims inclusive of defence costs arising out of any one accident . The
Companys Liability shall attach for claims in excess of such compulsory and
voluntary excess.

8.

EXCLUSIONS

This Policy does not cover Liability

VIII.1
for costs incurred in the repair, reconditioning, modification or
replacement of any part of any Product which is or is alleged to be defective;
VIII.2

for costs arising out of the recall of any Product or part thereof ;

VIII.3
arising out of any Product which with the Insureds knowledge is
intended for incorporation into the structure, machinery or control of any
aircraft;

24

VIII.4
arising out of deliberate , willful or intentional non-compliance of any
statutory provision.
VIII.5
arising out of pure financial loss such as loss of goodwill, loss of
market etc.
VIII.6

arising out of fines, penalties, punitive and/or exemplary damages;

VIII.7
directly or indirectly occasioned by happening through or in
consequence of war, invasion ,act of foreign enemy, hostilities(whether war be
declared or not ) , civil war, rebellion, revolution, insurrection or military or
usurped power;
VIII.8

directly or indirectly caused by or contributed to by or arising from:

a) ionising radiations or contamination by radioactivity from any nuclear
fuel or from any nuclear waste from the combustion of nuclear fuel
b) the radioactive toxic, explosive or other hazardous properties of any
explosive nuclear assembly or nuclear component thereof;

VIII.9
for damage to property belonging to the Insured or held in trust or in
custody or control of the Insured or a person in the service of the Insured.
VIII.10
arising out of Injury and/or Damage occurring prior to the Retroactive
Date in the Schedule.
Provided always that in the event of any Injury or Damage arising from continuous or
continual inhalation, ingestion or application of any substance following the covered
accident and where the Insured and the Company cannot agree when the Injury or
Damage occurred, then:
(a) Injury shall be deemed to have occurred when the Claimant
first consulted a qualified medical practitioner in respect of
such Injury.,
(b) Damage shall be deemed to have occurred when it first became
evident to the Claimant, even if the cause was unknown.
VIII.11
arising out of deliberate, conscious or intentional disregard of the
Insureds technical or administrative management of the need to take all
reasonable steps to prevent claims;
VIII.12
Injury to any person under the contract of employment or
apprenticeship with the insured their contractor(s) and/or Sub-Contractor(s)
when such injury arises out of the execution of such contract.

25
VIII.13
arising out of contractual Liability unless Liability have existed in the
absence of the specific contract;
VIII.14

arising out of any product guarantee;

VIII.15
arising out of claim for failure of the goods or products to fulfil the
purpose for which they were intended.
VIII.16
for liabilities arising out of products which have left the custody and
control of the insured prior to retroactive date specified in the schedule.
9. GENERAL CONDITIONS
9.1 The Insured shall give written notice to the Company as soon as reasonably
practicable of any claim made against the Insured (or any specific event or
circumstance that may give rise to a claim being made against the Insured) and
which forms the subject of indemnity under this policy and shall give all such
additional information as the Company may require. Every claim, writ,
summons or process and all documents relating to the occurrence shall be
forwarded to the Company immediately they are received by the Insured.
9.2 No admission, offer, promise or payment shall be made or given by or on
behalf of the Insured without the written consent of the Company.
9.3 The Company will have the right, but in no case the obligation, to take over
and conduct in the name of the insured the defense of any claim and will have
full discretion in the conduct of any proceedings and in the settlement of any
claim and having taken over the defense of any claim may relinquish the same.
All amounts expended by the Company in the defense settlement or payment
of any claim will reduce the limits of indemnity specified in the Schedule of
the Policy.
In the event that the Company, in its sole discretion, choose to exercise its
right pursuant to this condition, no action taken by the Company in the
exercise of such right will serve to modify or expand in any manner , the
Companys liability or obligations under this Policy beyond what the
Companys Liability or obligations would have been had it not exercised
its rights under this conditions.
9.4.The Insured shall give all such information and assistance as the Company
may reasonably require.
9.5 The Insured shall give notice as soon as reasonably practicable of any fact,
event or circumstances which materially changes the information supplied
to the Company at the time when this Policy was effected and the
Company may amend the terms of this Policy according to the materiality
of such change.
.

26
9.6 The Company may at any time pay to the Insured in connection with any
claim or series of claims under this Policy to which an Indemnity Limit
applies the amount of such Limit (after deduction of any sums already
paid) or any lesser amount for which such claims can be settled and upon
such payment being made the Company shall relinquish the conduct and
control of an be under no further liability in connection with such claims.
9.7 The Policy and the Schedules shall be read together as one contract and
any word or expression to which a specific meaning has been attached in
any part of this Policy or the Schedule shall bear such specific meaning
wherever it may appear. The terms, conditions and exclusions of this
Policy (and any phrase or word contained therein) shall be interpreted in
accordance with India Law.
9.8 The Insured shall keep accurate records of annual turnover which term
shall include all leviable duties and at the time of renewal of Insurances
declare such details as the Company may require. The Company shall at
all reasonable time have free access to inspect such records.
9.9 If in the event of a claim under this Policy, there be any other Insurance or
Insurances effected by the Insured or any other person covering the same
liability, then the Company shall not be liable to pay or contribute more
than its rateable proportion of such liability.
9.10 The Company may cancel this Policy by giving thirty days notice in
writing of such cancellation to the Insureds last known address and in
such an event the Company will return a prorata portion of the premium
(subject to a minimum retention of 25 per cent of the annual premium) for
the unexpired part of the Insurance.
The Policy may also be cancelled by the Insured by giving thirty days notice in
writing to the Company, in which event the Company will retain premium at shortperiod scale provided there is no claim under the Policy during the period of
Insurance.
In case of any claim under the Policy no refund of premium shall be allowed.
9.11 In the event of liability arising under the Policy or the payment of
claim under the Policy, Aggregate Limit of Indemnity per any one year
under the Policy shall get reduced by the extent of quantum of Liability to
be paid or actual payment of such claim. Under no circumstances, it shall
be permissible to reinstate the limit of indemnity to the original level, even
on payment of extra premiums.
9.12 It is also hereby further expressly agreed and declared that if the
Company shall disclaim liability to the Insured for any claim hereunder
and such claim shall not within 12 calendar months from the date of such
disclaimer have been made the subject matter of suit in a court of law then

27
the claim shall for all purposes be deemed to have been abandoned and
shall not thereafter be recoverable hereunder.
9.13 The Company shall not be liable to make any payment under this
Policy in respect of any claim if such claim shall be in any manner
fraudulent or supported by any statement or device whether by Insured or
by any person on behalf of the Insured and/or if the insurance has been
continued in consequences of any material mis-statement or the nondisclosure of any material information by or on behalf of the Insured.
9.14

POLICY DISPUTES CLAUSE

Any dispute concerning the interpretation of the terms, conditions limitations

and/or exclusions contained herein is understood and agreed to by both the
Insured and the Company to be subject to Indian Law. Each party agrees to
submit to the jurisdiction of any Court of competent jurisdiction within India
and to comply with all requirements necessary to give such Court of
Jurisdiction. All matters arising hereunder shall be determined in accordance
with the law and practice of such Court.

28
THE ORIENTAL INSURANCE CO. LTD.
PRODUCT LIABILITY INSURANCE
SCHEDULE OF THE POLICY
---------------------------------------------------------------------------------------------NAME ;
Insured

Address :
Description of Risk

Products covered
Policy Period :

Policy No.____________

Geographical Limits
(A) INDIA
(B) EXPORTS TO
from (time)_______________of (date)____________
To 12.00 midnight of____________ (date)

Total Premium :
Limit of
Any one accident
Rs._____________
Indemnity
Aggregate during the Policy period Rs._____________
FOR COUNTRIES OTHER THAN NORTH AMERICAN JURISDICTION
/----------------------------------------------------------Domestic
OECD
Non-OECD
-------------------------------------------------------Retroactive Date
Compulsory Excess
Voluntary Excess
FOR NORTH AMERICAN JURISDICTION ONLY
-------------------------------------------------------North American Jurisdiction Granted
Yes/No
--------Retroactive Date
Applicable Compulsory Excess
Applicable Voluntary Excess
-----------------------------------------------------------------------------------------IN WITNESS WHEREOF the undersigned being duly authorized by the
Company and on behalf of the Company has hereunto set his hand at
_______________this____________________day of____________19_____
Address of the Policy issuing office :
___________________________
___________________________
__________________________

FOR THE ORIENTAL INS.CO.Ltd..

Authorised Signatory

29

ENDORSEMENT
ATTACHING TO AND FORMING PART OF POLICY NO._________________
TECHNICAL COLLABORATORS INCLUSION CLAUSE
It is agreed that this Policy is extended to include the legal Liability of ..
(hereunder referred to as the Collaborator) with respect to the technical Collaboration
Agreement between the named Insured and the Collaborator. The declarations,
insuring agreementS, all definitions, exclusions, terms, conditions and limit of
indemnity of this Policy otherwise remain unchanged.
No claim shall be payable under this Policy unless the cause of action arises in India
and the Liability to pay claim is established against the Insured in an Indian Court,
except for the claims in respect of exports of products covered under the Policy. It is
further agreed and understood that only Indian Law shall be applicable to actions
brought in India.

30

VENDORS CLAUSE
It is agreed that
The persons insured provision is amended to include any person or organization
designated below (herein referred to as vendor) as an insured but only with respect
to the distribution or sale in the regular course of the vendors business of the named
insureds products designated below subject to the following additional provisions :
1. The insurance with respect to the vendor does not apply to
A.

Any expressed warranty or any distribution or sale for a

purpose unauthorized by the named insured.

B.

Bodily injury or property damage arising out of :

(I)Any act of the vendor which changes the condition of
the products.
(II) Any failure to maintain the product in merchantable
condition.
(III)Any failure to make such inspections, adjustments,
tests or servicing as the vendor has agreed to make or
normally undertakes to make in the usual course of
business, in connection with the distribution or sale of
the products, or
(IV)Products which after distribution or sale by the named
insured have been labelled or relabeled or used as a
container, part or ingredient of any other thing or
substance by or for the vendor.
(V)Any fittings and/or manual work additions and
alterations of whatsoever nature carried out to the product
by the vendor.

C.
2.

Bodily injury or property damage occurring within the

vendors premises.

The insurance does not apply to any person or organization, as

insured from whom the named insured has acquired such products or
any ingredient, part or container, entering into, accompanying or
containing such products.

31
NORTH AMERICAN JURISDICTION EXTENSION CLAUSE
Where the Insured has requested an extension to the Operative Clause for
indemnity to be granted in respect of any judgment, award or settlement
made within countries which operate under the laws of the United States of
America or Canada (or to any order made anywhere in the world to enforce
such judgment, award or settlement either in whole or in part) such extension
is only granted where so stated in the Schedule to the Policy and where a
specific amount has been entered against Applicable Excess , and where a
specific date has been entered against Retroactive Date in the Schedule
under the heading North American Jurisdiction, Acceptance by the Insured
of this Policy is deemed to be acceptance of the above conditions as
precedent to the granting of indemnity against such North American
Jurisdiction.
In consideration of the granting of such indemnity, the Insured agrees to
accept the following terms and exclusions in respect of any such judgment,
award or settlement:
1.

The indemnity does not apply to awards or damages of a punitive or

exemplary nature whether in the form
of fines, penalties,
multiplication of compensatory awards or damages, or in any other
form whatsoever.

2.

The Company shall not be liable for the amount shown as the
Applicable Excess in the Schedule, being the first amount of each and
every claim. For the purpose of this sub-clause (2) Claim shall be
deemed to include compensatory awards, claimants costs, fees and
expenses and associated defense costs.

3.

The indemnity does not apply to claims arising out of injury and/or
Damage occurring prior to the Retroactive Date stated in the Schedule
under the heading North American Jurisdiction. Provided always
that in the event of any injury or Damage arising from continuous or
continual inhalation, ingestion or application of any substance and
where the Insured and the Company cannot agree when the injury or
Damage occurred, then:
(a)

Injury shall be deemed to have occurred when the claimant

first consulted a qualified medical practitioner in respect of
such injury;

(b)

Damage shall be deemed to have occurred when it first

became evident to the claimant, even if the cause was
unknown.

32
Subject in all other respects to the terms and exclusions of the Policy which shall not
be deemed in any way whatsoever to override, modify or alter any of the specific
terms and exclusions applicable to this Extension Clause.

33

CO. LTD.
Address_________________
__________________
PROPOSAL FORM FOR PRODUCT LIABILITY INSURANCE

Liability of the Company does not commence until the Proposal has been accepted
and the Premium paid.
..
1. Name of the Proposer (in full)
Names of the Subsidiaries &
Associate Cos. (in full)
2.

Registered Address of the Proposer

3.

Business address of the Proposer

4.

Location from where distribution is effected

5.

How long have you been in the business?

6.

Do you manufacture the complete

Product? If not, what components/
Parts are purchased by you?

7.

Can the date of manufacture of each

Product be identified by the factory
Number stamped on it ?

8.

Do you have any assets and/or

Representation and/or any domiciled
Operation and/or activities and/or
Association (Financial, Technical or
Otherwise) in USA/Canada and other
Foreign countries? If so, please
Furnish details of association.

9.

Are you affiliated in any manner with

Any of your suppliers and distributors?

10. Please give full description of the

Following for the last three years:
10.A Year
(i)
(ii)

goods manufactured actual turnover

goods sold/supplied-actual turnover

19.. 19..
19..

34
(iii)

goods repaired, serviced, tested and processed

- actual turnover

10.B For the above, please give the projected turnover for the proposed period of
insurance as under :
(i)
Goods manufactured
(ii)
Goods sold or supplied
(iii)
Goods repaired, serviced, tested and processed
(Please attach leaflets, brochures and/or any other literature).
11. Please furnish details of products to be considered
For insurance which are manufactured and/or designed
(a)
(b)
(c)
(d)
(e)
(f)
(g)
(h)
(i)

Name of the product :

Principal component :
Annual Units produced :
Annual turnover :
How long has it been in the market?
Expected life of use:
Intended customer/ultimate user:
Warranties as to use:
Technical know-how/collaboration:

12. Do you have Research & Development Dept.?

13. Please specify any products which are
Inflammable/explosive, dangerous, radioactive,
Harmful to health, poisonous by themselves or any
Combination with others. If so, please give full
Details and state what precautions are taken.
14. Please state whether goods sold or supplied
Subject to disclaimer notice, and if so, please
Give full text, particulars of such disclaimer
Notice.
15. Please furnish particulars of new products
To be marketed during the next 12 months.
16. Please furnish details and list of products
Discontinued or recalled or withdrawn
During the last five years.
17. Please elaborate complaints, incident/accident
Reporting system in your organization.
18. Please give details of checks or examinations or
Controls including batch control and testing carried
Out or effected to discover possible defects or

35
Errors in products.
19. Do your products comply with standards like
ISI or any other Standards?
20. Have your products ever been subject to any
Enquiry or investigation by any Government
Agency, concerning the efficiency/adequacy or labelling,
Hazardous contents or safety? If so, please give full details.
21. What is the failure rate of each product after hand over?
22. Do you issue guarantees and/or warranties to purchasers?
If so, for what period do you guarantee and/or warrant your
Product?
23. Particulars regarding directions for use:
(a) Is it by printing on container or product/
(b) Is it by separate leaflet or brochure?
(c) Is the hazard warning clearly shown?
24. Please furnish claims history for the last three
Years in the following format :
(a) Year

19..

(b)No. of claims:
Total amount paid :
Bodily injury :
Property Damage :
Cost of defense action:
Total amt. of pending claims:
Bodily injury:
Property Damage:
Cost of defense action:

Rs.
Rs.
Rs.
Rs.
Rs.
Rs.

25. Are you aware of any incidents, conditions, defects,

Circumstances or suspected defects which may result
In claim?
26. Have your Proposal or renewal been declined or premium
Increased, special terms imposed by any Insurer?
If so, please give particulars:
27. Please indicate the limit of indemnity required for
domestic sales.
(i) Any one accident:
(ii)Aggregate during the Policy period.

19

19

36

28. Please indicate the Voluntary

Excess for each claim
(in addition to Compulsory Excess)
you are willing to bear.

U.S.A.
Canada

All other
countries
including India

29.Please quantify sales turnover

Product-wise for the last 3 years
as under :
(a)
(b)
(c)
(d)

Domestic
USA/Canada
OECD countries (to list)
Other countries including non-OECD countries.

30. How long have you been exporting to the

following countries and do you require cover for
exports to these countries?
(a) USA and Canada:
(b) OECD countries
(c) Other countries including
non-OECD countries
(Cover for exports will be granted only if
domestic turnover is covered)
31. Do you require Limited Vendors Endorsement?
(Please enclose a copy of the contract with the
Vendor/s and give the names to each product
of export to such countries)
32. Do you comply with USA/Canadian State/Federal
Laws/Standards applicable to each product of
export to such countries?
33. Please give details of any power of attorney
on Assets in USA/Canada.
34. Policy period:

From 12.00 midnight of_______

to 12.00 midnight of_____
I/We desire to effect an Insurance in terms of the Product Liability of
the.Company against the limits of indemnity specified above and I/We hereby
declare that all statutory provisions relating to my/our business proposed for
Insurance are complied with. I/We further declare that all the above statements and
particulars are true, and I/We have not omitted, suppressed, misrepresented or
misstated any material fact and I/ We agree tjat this declaration shall be the basis of
the contract between me/us and the Company and be incorporated therein.

37

Place :
Date:

Signature of the Proposer

SECTION 41 OF INSURANCE ACT 1938

PROHIBITION OF REBATES
1. No person shall allow or offer to allow either directly or indirectly as an
inducement to any person to take out or renew or continue an insurance in
respect of any kind of risk relating to lives or property in India any rebate of
the whole or part of the commission payable or taking out or renewing or
continuing a Policy accept any rebate except such rebate as may be allowed in
accordance with the prospectus or tables of the Insurer.
2. Any person making default in complying with the provisions of this section
shall be punishable with fine which may be extended to five hundred rupees.

38

RISK ASSESSMENT
PRODUCT LIABILITY
The Insurers decision to accept or reject a proposal, presupposes knowledge of all the
factors influencing the risk. Sound underwriting is possible only if the insurer
has the full knowledge of the risk.
In case of Products Liability covered, for risk assessment, there are numerous factors to be
taken into account. Analysis of risk is based mainly on the production schedule and activities
of the Insured. The Insurer should, therefore, obtain as much information as possible on the
activity of the Insured. What products or groups of products are manufactured? What are
they used for? What proportion of sales do the products proposed for Insurance, constitute
on the total sales?
Insurers should obtain detailed description of the various products, Brochures, catalogues,
prospectus etc., not only supply valuable additional information but also describe the
products more clearly than a simple list of names.
The aspects of risk assessment are dealt with in details in the RISK ASSESSMENT
REPORT as appended hereto. This report is required for the following :
1. Exports involving U.S.A. and Canada irrespective of limit of Indemnity.
2. Exports involving countries other than U.S.A. and Canada for an aggregate limit of
indemnity during the Policy period exceeding Rs. 50,00,000/-..
3. Proposals not involving exports for an aggregate limit of indemnity during the Policy
period exceeding Rs. 2,50,00,000.

39
CO. LTD.
Address_______________
..
PRODUCT LIABILITY RISK ASSESSMENT REPORT
(Private & Confidential: Exclusively for the use of the Insurers)
I Name of the Insured :
Address of the Insured:
(Give all locations and specify
product at each location and how
they interlink.)
II. Product :
1. Full description of each product:
(Attach brochures and details
including past products.)
2. Total turnover of each product:
3. Markets:
(Include possible specify any
high-risk areas.)
4. Countries of exports with extent
of previous exports even if products
no longer supplied to such markets.
5. Export turnover :
(i) USA/Canada
(ii) OECD
(iii)Others including non-OECD countries
6. Domestic sales turnover:
III. Product Safety Control Programme:
1. Has a programme been devised?
If so , give details.
2. Is this programme comprehensive
and clearly understood by concerned
persons?
3. Is the programme distributed to
all departments?

40

4. Is the programme regularly checked and updated?

5. In the absence of written programme, what
other arrangements exist?
6. Has a Product Safety Committee been formed?
How frequently do they meet?
7. Does Committee include decision makers from:
(a)
(b)
(c)
(d)
(e)
(f)
(g)
(h)

Design Engineers
New Products Dept.
Manufacturing
Quality Control
Service Dept.
Legal Dept.
Advertising Dept.
Personnel Dept.

8. Are the regular safety personnel

involved in drafting and implementing
the programme?
IV.

Areas of responsibility to implement programme.

1. Who has overall responsibility for Product Safety?
2. Has someone from top level management been
designated to co-ordinate programme implementation?
3. Are Quality Assurance Audits undertaken?
These should cover all aspects referred to in the
various sections of this report. How regular are these?
What is procedure for implementation if findings?
4. What training has been given?
5. Are Insured members of any trade association?
6. Are Insured members of Institute of Quality Assurance
like Indian Standards Institute, British Standards
Institute, etc.? If so, to what extent do they use the
services offered?

V. Hazard Analysis & Product Safety:

A. 1. Hazard Analysis :

41
a) Is this undertaken ?
b) What system is used ?
Does this include consideration
of misuse of product as well as
correct use ?
c) How is information disseminated
and applied in design/manufacture etc?
d)Does it include consideration of previous history ?
2. Does the product conform to a recognized Standards
e.g. I.S.I / B.S.I etc or any code of Practice followed ?
3. Is outside technical know-how / collaboration/consultancy sought ?
Give details :
4.Are all inbuilt safety devices/guard etc . designed to fail-safe ?
Give Details :
5. What warnings are displayed on product ?Are these adequate
and displayed prominently ?
6. What would be the effect of failure of product to perform
its intended function ?
B. Design :
1. To what extent is design undertaken by the insured ?
2. Is there a statement of the requirements of the design
expressed by drawings and performance specifications and is there
international documentation of process lay-outs, Process Specification
Test schedules, etc
3.How are design changes handled and are systems
adequate to ensure old design withdrawn ?
4.How are new designs tested prior to
commencement of Production ?
What records are kept ?
C. Material used :
1. What are the materials/components used for each

42
product ?
2. Are any components sub-contracted ?
Give details of specification adopted .
3. How is quality of the material/components checked ?
Give details of checking
4. What would be effect of faulty material/component on the
finished product ?
F.

Packaging/Labelling :
1. Nature of packaging Is it adequate ?
2. Where are supplies obtained from?
3. Is packaging adequate to protect handler?
4. What checks are made on packaging quality ?
5. How is packaging labelled ? Is this adequate to give clear
indication of contents ? (Supply copes if available ). :
Is abelling adequate and of suitable size ?
6. How is labelling controlled to prevent errors ?
7. Who undertakes packaging ? If an outside agency,
what control does Insured have ?
8. What records are kept ?
VI . Sales & Distribution :
Sales :
A. 1 . How are sales organized ?
2. What Advertising literature is used?
(Attach copies if available)
3. Does this make any extravagant or misleading
claim ?
4. Is advice to customer given ?
Give details .

43
5. Condition of sale
(Attach copy6 if available)
6. Is it necessary for product to have any test certificate ?
If so, who provides this?
7. What records are kept ?
B. Distribution :
1. What is your distribution network ?
2. What method of transport is used ?
3. What despatch control procedures and records are used?
4. Does the product have a shelf life?
If so, state period and how this is indicated
to customer, e.g. sell by dates?
5. Is there any interim storage ?
Give details .
6. Is the transport use available for other products?
If applicable what cleansing and inspection methods are used between products?
C. Advice to customers in product use :
1. What facilities do the Insured have for customer enquiries
relating to the use of the product ?
2. What records are kept of additional advice given ?
3. Is any guidance/advice given on customer premises ?
Give details
D. Installation :
1. What percentage of product is installed by Insured ?
2. Do insured undertake full commission of product ?
3. Is the installation being done by qualified and skilled staff ?
VII . Customer Complaints :

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1. What is procedure for handling complaints ?

2. Is a senior management official responsible ?
3. How is customer advised of any fault discovered in a
particular design or batch of work ?
4. Are the Insured able to trace the location of any specific product
or component after sale ?
5

What would be effect of a product failure give maximum possible

loss if this can be quantified(Consider nature of business of possible user)

6. Is there an established method of product recall ?

7. What records are kept ?
8. Are faults tabulated and analysed to locate the problem
areas or trends ? If so howoften and what action is taken ?
9. Is there an established method of coordinating faults with design
and manufacturing process to avoid recurrence and to rectify where
necessary ?

VIII. Previous History

1. What has the history been of :

a) Complaints ?
b) Injuries to persons from products ?
c) Damage to property from products and
consequentional losses arising thereform ?
d) Claims against the Insured ?
Whether proven or otherwise over the past 3 Years .

2. Are proper records kept ?

3. What action is taken on complaints of customers?
4. Is reference made to all such previous records when considering
a new design (i.e. do they learn by their mistakes?)

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IX.

Other Considerations

1. Is there any other factor likely to affect the risk (e.g. items
of local knowledge language problem - general law management
attitude displayed by poor house-keeping etc)?
2. Comments on supervisor and labour relation
X.

Recommendations :

Please provide
1. Positive assessment of hazards related to products.
2. Assessment of organizations and methods employed (in the light of information
obtained) to deal with such hazards and produce to a customer a product which
is both safe and reliable in use.
3.An opinion relating to acceptability at the time of survey and the trends anticipated
In the risk in the future .

Please consider :
1. All manufactured products have a failure rate .
2. Can a defective product be supplied?
3. What is probability of a defective product producing a claim?
4. What would be likely cost of that claim and its effect ?
5. If we had to defend an action Can we say it was a good product designed
and produced with safety in mind and sold in a safe manner with adequate
instructions .

Place :
Date:

Signature
Name