Define: Design-Defect Exclusion

A design-defect exclusion is a clause in an insurance policy that excludes coverage for claims arising from defects in the design of a product.

Insurance policies have design-defect exclusions to limit the insurer’s liability for claims related to faulty product design. These exclusions help insurers manage their risk and prevent them from having to pay for damages caused by inherent flaws in a product’s design.

Claims arising from injuries or damages caused by a product’s defective design are typically excluded under a design-defect exclusion. This can include claims related to inadequate safety features, improper materials, or flawed engineering.

Yes, a design-defect exclusion can be challenged in court if the insured believes that the exclusion is ambiguous, unfair, or against public policy. However, the outcome of such challenges will depend on the specific language of the exclusion and the applicable laws in the jurisdiction.

Some insurance policies may include exceptions to the design-defect exclusion. For example, if the insured can prove that the defect was caused by a manufacturing error rather than a design flaw, coverage may still be available.

Yes, businesses can often purchase additional coverage, such as product liability insurance, to protect themselves against claims arising from design defects. This additional coverage may have its own terms and conditions, including specific exclusions and limitations.

To minimize the risk of design-defect claims, businesses should invest in thorough product testing and quality control processes. They should also stay updated on industry standards and regulations, and consider obtaining professional advice or consulting with experts in product design.

In some cases, it may be possible to negotiate or modify a design-defect exclusion in an insurance policy. This can be done through discussions with the insurer or by seeking assistance from an insurance broker or attorney who specializes in insurance coverage.

Design-defect exclusions are most commonly found in product liability insurance policies. However, they may also be present in other types of insurance policies that provide coverage for property damage, personal injury, or professional liability.

If a claim is denied based on a design-defect exclusion, it is advisable to review the insurance policy and seek legal advice. An attorney experienced in insurance law can help determine if the denial is valid and explore potential options for challenging the denial or seeking alternative avenues for compensation.