business insurance

Business insurance for the robotics industry

By June 13, 2019 No Comments
Robotics-Industry-Insurance

The advances in science and technology bear testimony to the capabilities of human beings, and how the human mind can be used to make advances in life. The invention of robots is an instance of exemplary achievement in the field of science and technology. Robots have minimised human efforts and made things quicker and more efficient.

Robots have been employed by various industries and businesses to bring about efficiency, increase their output, and make more profits. Some of the industries that employ robots include the medical industry, information technology, automobile industries, etc. While there have been positive effects on the usage of robots, it also has its negative consequences. Like any human invention, robots are also prone to causing damage and destruction that can lead to losses for the business and sometimes also to the loss of human life. To protect against such unforeseen circumstances, there are various insurances that can be purchased. This article will provide an account of some of those insurances.

Some of the risks associated with the usage of robots

Some of the risks associated with the usage of robots in the workplace include the following:

  • Robots are often put in charge of crucial work in the industry in which they are employed. This also includes using robots for handling tools that can be hazardous for human beings. If such a robot malfunctions, it can cause injuries or even death of people working in that industry.
  • There can be instances when there is a software malfunction inside the robot. In such cases, the robots can make calculation error or provide incorrect readings.
  • The hardware of a robot can also suffer a malfunction. In that case, the robot might not work at all.

Liability issues in the robotics industry

If a mishap occurs in the industry due to the failure of a robot, issues pertaining to its liability emerge. The liability is fixed in two possible ways, depending on the cause of the failure of the robot. If the robot has malfunctioned due to a prior manufacturing error, then the manufacturer of the robot is held responsible. If it malfunctions due to a mistake committed by the one operating it, then the liability is upon the business/industry which has employed the robot.

Based on these two diverse forms of liability, various types of insurances can be opted for the robotics industry. An account of such insurances is provided underneath.

General and Products Liability Insurance

This insurance policy is also referred to as liability insurance. The insurance policy is usually purchased by product manufacturers. The manufactured product may cause bodily injuries, death or damage to other property- to whom that product has been sold. In such a situation the manufacturing company can be sued for criminal negligence, asked to provide compensation costs, failure to warn costs, etc. In such circumstances, liability insurance reimburses those costs to the manufacturing company.

Some of the instances during which a robot manufacturer can be sued by its clients are the following:

Faulty design and negligent manufacturing

A client can sue a robot manufacturer for designing a robot improperly and thereby manufacturing a faulty robot. The lawyer of the client has to prove it in a court of law that due to the improperly made robot that was sold to the client, he/she has suffered losses. The lawyer would further have to argue that, if due diligence were shown by the manufacturer, then he/she would have been able to produce a well-functioning robot. In case, the well-functioning robot was sold to the client, then the client would not have suffered the damages.

Lack of Warning

A manufacturer might be aware that a robot produced by them has certain faults which can cause damage to the business purchasing it. It is the manufacturer’s duty to warn the business about these defects prior to selling it. In case, the manufacturer fails to give such a warning, it can be sued for criminal negligence.

The liability insurance can be purchased by the robotics industry. If the robot malfunctions due to manufacturing defects, and such a defect causes damages to the third party, then the manufacturing industry can protect itself through the general products and liability insurance.

However, increasing developments in the robotics industry are creating complications in the fixing of liability in case of a product malfunction. For example, many robots function through artificial intelligence. Robots which are sold by the manufacturing industry can, later on, pick up diverse algorithms, accumulate new data and also auto-update its software. These later updates can lead to a robot malfunctioning and causing damage to the business. In such cases, it is not the manufacturer’s fault, but can be the fault of the algorithm writers, the hardware company which has provided the hardware of the robot, company which has assembled the various parts of the robot and many more. In such circumstances, it is very difficult to ascertain who should be liable for the robot’s malfunctioning and the damages it has caused.

Errors and Omissions Insurance

The errors and omissions insurance protects a business, its employees and other associated professionals against complaints of negligence or professional misconduct. Negligence or misconduct of an employee can lead to severe losses for the client of that particular business. In such circumstances, the client can sue the business for negligence, inadequate work, breach of trust, etc. The Errors and Omissions Insurance usually helps in reimbursing the costs of pursuing legal cases or paying the costs for out of court settlements. The amount that is to be reimbursed to the insured business by the business company is mentioned in the policy document.

Businesses which employ robots for their work can be considered as the employees of such businesses. Hence, any kind of losses that a client suffers due to the mistakes committed by a robot is akin to the mistakes made by a human employee. The Errors and Omissions Insurance usually pays for the financial losses suffered by the client due to the mistakes of the employee (in this case the robot). Whereas, the General Products and Liability Insurance reimburses the costs emerging out of bodily injury or death.

Not just manufacturing, logistics and automobiles industries, small businesses in e-Commerce have also begun using robotics for better performance. But a number of these small companies are hardly aware of the risks related to robotics and the insurances that can help mitigate these risks. PlanCover is a new age insurance broking company that specializes in SMEs insurance. Get in touch with PlanCover to know how to protect your business from robotics related risks.

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