Product Liability for Exporters

In most developed countries where goods are shipped from Vietnam, consumers are protected by law, national certification organizations and the company producing or distributing:

– Product quality standards laws of the Importing country (technical specs and packaging)

– Industry specifications and registrations certifications (medicines, electricity…)

– Hygiene and security standards of the country

– Products specifications by the client – 100% controlled or not by whoever is QCS

Any damage by any 1 product to the consumer causing material damage or bodily injury or disability to the final client may give rise to a legal action for indemnity for defective product. If say, 1 defective product -like a lamp producing an electric shock-, causes 1 death estimated to USD2Mio prejudice to the dependents, imagine the possible exposure of an export shipment of 1,000,000 pieces. Whether multiple injuries cases, mass repairs or recalls will surely incur costs that someone will be liable for.

NB. In Vietnam, product liability insurance is not widely purchased as the ‘cost of life’ is not high, legally the equivalent of 30-month salary.

When you purchase Product Liability Insurance, the insurer will indemnify the Insured against all sums that the Insured are legally liable to pay compensation in respect of:

– Bodily injury to or illness or disease of any person

– Loss of or damage to property

– Extension of cover to Product recall insurance

Caused by any defect in or the harmful nature of any product supplied by the Insured in connection with the Insured’s business. It will also pay costs and expenses of litigation in respect of a claim against the Insured for compensation.

When you purchase Product Recall insurance, you will be covered for expenses related to a product recall incident. Such expenses could be:

– The cost of publishing the recall

– The cost of shipping the recalled product

– The cost of hiring additional persons to analyse, research, inspect… the recalled product

– Remuneration paid to employees for overtime

– Renting additional warehouses

– Disposal of the recalled product

– Costs incurred as a result of the Insured’s liability to wholesalers, distributors, retailers…

– Repairing or replacing the product

For the selection process we will select the right insurer and product but more importantly, we help our client define:

– Who should be responsible for what risk?

– The regulations and compliances in the country you export and you are exposed to

– Define the perimeter thus the limit of liability and coverage

– Compare 2 or 3 providers onshore or offshore based on reliability of ‘the brand signature’ but also their specialty in the country of export