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Upstate New York (US) here.

Say I am a small-time maker of some simple electronics product. The product is tested/certified as being compliant with all applicable consumer safety (EMC, SAR, RF, EM immunity, etc.) standards. And because of this, I am able to obtain Product Liability insurance from some carrier.

Now, one of my devices fails and causes a house fire. The homeowner sues and I lose the suit, however, not because this particular device was built improperly or out of band from our (again, tested/certified) practices. It simply failed, which, sometimes electronics do.

Now I wish to file a claim with my Product Liability carrier. How does this work?

The court is awarding X in damages, and I am required to pay by Y time. However, the claim might takes months to go through and be approved. So, from an insureds perspective:

  • When should the claim be filed?
  • What happens if the insured is required to pay before the carrier has time to approve/deny the claim?
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Read your policy but this is what is normal.

The insurer should be notified as soon as you are aware of a potential claim. A claim should be made with the insurer as soon as a claim is lodged against you.

The insurer, with your input, will decide whether to fight the claim or settle on your behalf; after all it's their money being spent. If they decide to defend the claim, they will choose and engage the lawyers and your role will be to provide evidence. If you lose, they will settle the claim (you will have paid them the excess months or years ago).

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