CMFAS CGI Commercial Liability Insurance question: exposure under product liability regarded

CMFAS CGICommercial Liability Insurance

Why is the exposure under product liability regarded as especially significant for a manufacturer?

A Because the policy must also pay to replace every defective product the insured supplied
B Because the law allows only one claimant per defective product, making each claim very large
C Because product harm can only occur on the insured's premises, where visitors are concentrated
D Because one defect can cause many claims, and liability can be imposed relatively strictly

Show the answer and explanation

Answer: D. Because one defect can cause many claims, and liability can be imposed relatively strictly

The exposure is significant because a single defective product can cause many separate claims, and modern law can impose liability on suppliers relatively strictly, from defects, contamination or inadequate warnings.

Common mistake

Underestimating product liability by assuming each incident produces only one claim or that fault must always be proven.

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CMFAS CGI Commercial Liability Insurance question: exposure under product liability regarded

Answer: D. Because one defect can cause many claims, and liability can be imposed relatively strictly

Common mistake

Related CMFAS CGI questions

CMFAS CGI Commercial Liability Insurance question: exposure under product liability regarded

Answer: D. Because one defect can cause many claims, and liability can be imposed relatively strictly

Common mistake

Related CMFAS CGI questions