Manufacturing a product and finding overseas sales outlets is only the beginning of the global export story. No matter where you sell your goods – the USA, Canada, Europe, Australia, or South East Asia – the laws of those countries hold you responsible for any loss, damage or injury caused by any of your products. In short, your legal liability travels with every product you sell.

Today, in world markets everywhere, consumers are becoming more aware of their rights and are quicker to exercise those rights by filing product liability suits against exporters, manufacturers and processors. For example, in addition to the Strict Product Liability Laws found in many countries including USA, Australia and Japan, there are now also substantial EU Directives on product liability.

Just one claim against you could put a severe financial strain on your business – and might even lead to financial ruin.

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A manufacturer, distributor or retailer can be held liable for a faulty product in one of three ways:

NEGLIGENCE
Failure on your part to exercise reasonable care in the manufacture of a product. The Injured party will seek to prove that you knew, or should have known, that a hazard existed, and took either no action, or insufficient action, to minimize or eliminate the risk. “Negligence” can cover areas such as inadequate or misleading instructions, or failing to explore the consequence of normal wear and tear, or even of product abuse.

BREACH OF WARRANTY
When a product is sold, there is an implied warranty that the product is fit and suitable for the purpose for which it was manufactured. If the product does not meet this standard, the manufacturer is in breach of warranty.

STRICT LIABILITY
Which assumes that the manufacturer, distributor or others are at fault. The claimant merely has to show (not prove) that:

· The condition existed when the product left the manufacturer’s control
· The product’s condition was unreasonably hazardous;
· What happened was a result of the condition of the product;

This is the most usual type of claim, and it is particularly difficult to contest, because you have to prove that your product was not the cause of the loss or injury, or was not unusually hazardous.

How Your Business Can Be Affected
Wherever in the world you do business, an action exposes you to the likelihood of financial loss through:

· Any personal injury caused by your product
· Damage to property
· Lost income
· Negative publicity
· Loss production
· Loss of market
· Punitive damages

Financial liability is based on the normal scale of awards made in the country where the loss, damage or injury occurred. In the many countries nowadays, there can be substantial.

Win or lose, the cost of simply defending yourself against a product liability claim can be very high indeed. If you do not actively defend yourself in court, your company faces the risk not only of damaging publicity, but of being legally denied access to that country’s markets from then on.

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With an Export Product Liability Insurance Policy (subject to the terms and conditions), you are protected against actions brought to court by a member of the public, or by a retailer or distributor, seeking recompense for any loss, injury or damage caused by your products.

Such Policy can be designed around your particular exporting needs, and it helps you protect your markets by transferring certain of your risk to the insurance company at a known cost for which you can budget.

You can be covered (subject to the terms and conditions) worldwide against:

· Legal expenses
· Any investigative work necessary to verify the cause of the injury
· Any compensatory damages awarded against you or your company by the court

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Product Liability Insurance is an essential passport to a growing number of overseas markets. Some major international buyers will not do business with you if you don’t have it. More and more, because of stringent local product safety laws, importers demand that exporters are fully able to stand behind their products. So not only does such cover protect you – it opens doors to trade that otherwise would remain closed. Why take the risk of losing orders, or of a substantial financial claim against you, when the cost-per-unit of covering yourself is minimal.

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· Anticipate foreseeable uses of the product including those which are not the principal intended use
· Anticipate foreseeable risks of harm or injury as a result of all foreseeable uses
· Design products to prevent or reduce the risk of accidents and minimize the extent of injuries
· Design products to meet all industry standards and attempts to exceed them
· Manufacture products in strict accordance with design specifications. The highest standard of manufacturing quality control should be achieved
· Inspect for quality of all components incorporated in the manufactures final product
· Warn of foreseeable risks associated with foreseeable uses and misuses of the products. If possible, instruct the product users how to avoid injury. Make warnings clear and understandable. In order to balance attention given to obvious and inherent risks, you should be well advised to consult with an attorney versed in the industry and familiar with Product Liability Law particularly in the USA and Canada. Depending on the product and target market, warnings may be required in languages in addition to English.
· Make express warranties clear and understandable. Review specific language with a qualified attorney.
· Ensure that marketing materials do not contain inaccuracies regarding the utility and performance of the product. The review of such material by a qualified attorney is appropriate.

· Even after products have been sold, monitor for injuries associated with their use to consider post-sale warnings, post-sale modifications and design changes for future products.
· Secure products liability insurance from an insurance company with the resources to meet your needs. Make certain there is no confusion as to what exposures are covered. You should know whether legal expenses in defending a claim are paid by insurer and whether a payment of legal expenses reduces the policy limit.

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Huatai Insurance Company of China, Limited is a stock company focusing on property and casualty insurance and the first of its kind with a national franchise. The company was set up in Beijing on August 29, 1996 with registered capital of RMB 1.333 billion.

Huatai Insurance has 30 branches and operates all kinds of enterprise property insurance, liability insurance, automobile insurance, short-time health insurance, personal accident insurance, reinsurance and other compulsive insurance dealt by Renminbi and foreign aggression. Investment is the other profit center and Huatai Insurance has achieved prominent performance in capital application.

Since 2002, Huatai Insurance Company became a strategic partner of the ACE Group of Companies (ACE). ACE is one of the world’s largest providers of insurance and reinsurance. It was established in 1985 and headquartered in Bermuda, with total asset of US$37billion. ACE provides a diversified range of products and services to clients through operations in nearly 50 countries around the world. ACE and its subsidiaries have a rating of A+ by AM Best and A+ by Standard & Poor’s.

Example 2: The Inflammable Shirt - US$1.3million Settlement A Hong Kong shirt manufacturer sold his products to a store in Wisconsin, USA. A child was severely burned while wearing one of the shirts. The parents sued the store and the manufacturer. The manufacturer argued that a Wisconsin court had no jurisdiction over him, but the court ruled that a foreign manufacturer was subject to Wisconsin’s liability laws if he knew, or should have known, that his product might be used in Wisconsin. The total cost of the settlement was US$1.3 million.

Example 3: Lack of Proper Labeling - US$27Million Settlement A two-year old child suffered a cardiac arrest and brain damage from a TV powered by mains electricity. The parents brought a strict liability action because the timer carried no warning that it was “live”. The Japanese manufacturers contested the jurisdiction of New York court but after ten years, and just prior to trial they settled out of the court for US$27million. They were covered by Product Liability Insurance.

This brochure is intended to provide only a general description of this insurance and service discussed and is not intended to describe them in detail. We recommend that a potential purchaser thoroughly examine our policy offered and consult with an appropriate expert to be certain of the precise nature of its details.