Product Liability Insurance will cover for cost of compensation against financial losses suffered by a third-party arising out of use or consumption of a faulty product. The third-party has to suffer a bodily injury or property damage.
The Indemnity only applies to claims out of accidents during the period of insurance arising out of any defects in the products specified for and/or arising out of Injury Damage or Pollution.
In India, Product liability law is applicable to the liability of manufacturers, distributors, wholesalers, and retailers for injury to person or property caused by dangerous or defective product.
Product Liability in India is governed by :
- The Consumer Protection Act (CPA), 1986
- The Sales of Goods Act, 1930
- The law of Torts
India does not have a general product liability statute, but there are several general laws that protect consumers from defective products.
There are other specific statutes for Food manufacturing companies that contain provisions relating to product safety, standards and regulations, such as: The Food Safety and Standards Act 2006. ( FSSA)
A company that manufactures, sells, distributes, or packages food products will be held liable for any illnesses, deaths, or property damage caused by the food product to consumers. This might arise from no fault on the part of the company, but it will still be held liable under the law. If the court establishes a convincing link between the product and the injuries or deaths caused, the company will be ordered to pay damages to the affected parties. These damages could be high.
The Food Safety and Standards Act, 2006 (FSSA) has laid guidelines pertaining to product liability guidelines in India. The FSSA regulates the manufacture, storage and consumption and sale of food products in India. It can impose both civil and criminal liability and the liability rests with all the stakeholders in the food product supply chain including the manufacturers, packers, wholesalers, distributors and sellers.
The FSSA has also setup the regulatory body ( Food Safety and Standards Authority of India (FSSAI) to deal with food and safety standards which are to be complied with by manufacturers and producers. Any non-compliance of which imposes a liability, upon defaulters, of fine, extending upto Rs. Ten Lakhs and/or imprisonment.
The food which has been processed, manufactured or distributed is not in compliance with this Act, or the rules or regulations, the manufacturer shall immediately initiate procedures to withdraw the food in question from the market and consumers indicating reasons for its withdrawal and inform the competent authorities.
A product liability cover and a comprehensive product recall insurance program will provide a holistic protection for food processing companies.