Product Insurance

Technological developments make reliance on design advice from manufacturers, suppliers and specialist contractors increasingly necessary.  Employers all too readily look to the insurance policies of the traditional design consultants.  It would be advisable for these consultants, where they rely on specialist advice obtained from others, to advise on the need for each party to hold suitable insurance cover.

Suppliers are more likely to have insurance against the risk of their products being found not to be fit for purpose than for design.  Thus, where a supplier is brought into the design process, it would be advisable to check that suitable insurance is in place. 

A difficulty with a supplier and their insurers has recently arisen because of the supplier’s contribution to the design of a building. 

The product they supplied was not fit for its purpose because it was wrongly selected, not because it was badly made or due to faults in the materials used.  The supplier had been involved in the design development and, through the advice they gave, had directly caused the error in selection of the component they supplied.  Their insurance did not provide indemnity for errors in the design of the buildings which used their products but would indemnify them for errors in the design of the products themselves.  The sum in dispute is large and the supplier is resisting the claim because his insurance is inappropriate.  Had the nature of their insurance been looked into earlier, appropriate insurance cover could have been obtained.