Auto Component Manufacturer Insurance
Auto parts are a large sector of the manufacturing world, yet they are much more difficult to insure than would be expected. Many insurers will not take on this risk and those that do, often ask for too much paperwork and are slow to issue a quote. For that reason, getting a quote from auto parts suppliers or auto parts manufacturers is extremely difficult. Fortunately, a handful of insurance companies have deep knowledge of the auto parts manufacturing industry and are able to quickly issue a suitable policy. These insurers have the ability to do what others can’t for several reasons – making auto parts manufacturing insurance policy a must-have for any company. This type of insurance product is specially designed for businesses that produce parts and components used in the auto component industry. This insurance includes a wide array of insurance products ranging from product liability insurance, property insurance, and workers’ compensation insurance, to business interruption insurance.
Increasing regulatory scrutiny, pressured margins, contractual requirements, complex supply chains, and changing technology can lead to an increase in the occurrence and severity of losses, especially for auto component manufacturers. Taking into consideration the specific risk exposures faced by auto component manufacturers and what their clients often contractually require from them, this policy is an all-in-one insurance solution.
Key Highlights of Auto Component Manufacturer Insurance
This policy has come up with a sack full of benefits and facilities that help insured people stay protected and secure. The key highlights of this product are mentioned below.
It is one policy for all liability exposures that can help to ensure that there are no grey areas when it comes to coverage.
Legal liabilities arising due to bodily injury or property damage suffered by clients due to faulty products are covered by the product. Losses incurred include the cost of a lawyer, investigation costs, and compensation awarded by the court will also be covered.
Product recall may arise due to a defect in the product that may lead to bodily injury or property damage to a client or its customers. The cost of dismantling, transportation, and repairs can be substantial.
An accident can lead to own damage or third party loss. The cause could be fire, natural catastrophe, a machinery breakdown, or sudden pollution. Reinstatement of assets and indemnification of 3rd parties is covered.
Business Interruption Risks:
The inability to resume operations after an accident can lead to consequential losses. Factory may require to be shut down until reinstatement. Loss of profits and continued standing expenses can be covered.
Innovative and Dynamic:
This a unique product that is a comprehensive and one-stop solution for auto component manufacturers.
This policy can be customized according to the requirements of the policy seeker. Covers can be bought or eliminated as per the specific need. Therefore, this product becomes cost-effective as well.
What Are The Inclusions of Auto Component Manufacturer Insurance?
Inclusions refer to those covers for which an insurance policy offers coverage. Therefore, the inclusions of an Auto Component Manufacturer Insurance are as followings.
This product offers cover where there is evidence that a product could or already have caused bodily injury or property damage.
Under this insurance policy, one can get cover when a design or manufacturing error results in the failure of a product to perform its intended function.
It provides coverage for the insured where a government authority or safety agency orders or mandates a recall.
Third Party Financial Loss:
This policy offers an insured coverage for costs that a third party (like a customer) holds them liable for that have arisen as a direct result of the insured’s product defect.
It provides coverage for damages the insured may become legally obligated to pay because of bodily injury, property damage, and personal and advertising injury.
In the case of product liability, it provides coverage for damage the insured may become legally obliged to pay because of bodily injury or property damage caused by the insured’s product.
It also offers coverage for a loss for which the insured becomes legally liable to pay as damages due to a claim for financial injury caused by a wrongful act.
Industrial All Risk Cover:
Industrial All Risk cover is a comprehensive insurance policy that provides protection to auto parts manufacturers against damage or loss to their property, including buildings, machinery, and stocks. It also covers third party liability claims and loss of income due to business interruption caused by insured perils like flood, fire, theft, and natural disasters.
In case someone overseas sues the insured person in their local court under the local law against bodily injury or property damage caused due to a defect in the product of the policyholder, this policy will cover the defense cost.
Exclusions of Auto Component Manufacturer Insurance
A Component Manufacturer Insurance policy offers benefits and facilities to the insured person. However, it also comes with certain exclusions for which it does not provide any coverage. To understand a policy comprehensively and to avoid future complications, it is important to go through the exclusions of the policy thoroughly. Therefore, the general exclusions of the Auto Component Manufacturer Insurance Policy are as follows.
- Any kind of intentional injury, damage, suicide, or suicide attempt is not covered under this policy.
- If there is any kind of breach of law wilfully, this policy will not take any liability for that.
- If there is anything that does not satisfy the terms and conditions of the policy or the company, that will also fall under the category of exclusions.
- Some auto body parts suppliers are difficult to insure because liability can grow very quickly and can potentially be unlimited. Defects can grow into public relations nightmares and losses can be unlimited when the damage results in injury or death.
- Criminal acts and contractual liabilities will be permanently excluded from the policy.
- If there is any loss due to noncompliance with the regulatory standards that will also fall under the category of exclusions.
- The policy may also exclude coverage for damages resulting from normal wear and tear, faulty workmanship, or design defects.
Claim Procedure of Auto Component Manufacturer Insurance
If the insured person needs to file a claim against his/her Auto Component Manufacturer Insurance, then the following steps are to be followed.
- As soon as the incident happens, intimate the insurer about the incident along with in-depth details such as the date and time of happening, the location of the incident, as well as the damages and losses incurred due to the incident.
- Collect or download the claim form from the website of company. Submit the duly filled and signed claim form along with relevant documents such as photos of the incident, statements of the witness, if any, and other documents to support the claim.
- Some insurers provide different forms to fill up with specific details such as claim description, description of the event, etc.
- A surveyor may be appointed on behalf of the company to evaluate the situation and to find out the magnitude of losses and damages.
- Co-operate with the surveyor and the insurer. Do not produce any false information. Remember, one single piece of wrong information can bring get the claim canceled.
- Provide the other necessary documents as demanded by the insurance company.
- Once the complete submission of all the necessary documents is done, the company will scrutiny the details.
- If no discrepancy is found, the claim amount will be reimbursed to the insured person within the stipulated time.
Premium Calculation of Auto Component Manufacturer Insurance
The premium calculation for the Auto Component Manufacturer Insurance Policy depends on many factors, the most important one among all is the risk that the product represents. The other pivotal factors are the deductibles, the claim history of the company, geographical location, the opted covers, business turnover, the country of export, previous loss history, quality control procedure followed by the company, etc. The insurer will typically assess the risk level of the business to determine the appropriate premium value. This involves evaluating the likelihood of claims, and the potential costs of those claims based on the factors such as the products being manufactured, the safety protocols in place, and the company’s past history of claims.
Additionally, the insurer may consider the company’s location, the number of employees, and the overall revenue of the business when determining the premium amount. Overall, the higher the risk associated with the business, the higher the premium is likely to be. Conversely, if the business has a good safety record and low risk, the premium value will be lower accordingly. It is essential for businesses to work with their insurer to understand the factors that can influence the premium and take steps to mitigate risks and reduce costs wherever possible.
Frequently Asked Questions
Here are some of the frequently asked questions that you must know.
This important product can help you in numerous following ways:
- Shareholder Value – Liability losses and recalls can have a significant effect on a company’s balance sheet, causing a cash shortage that can eliminate profit. This policy helps to sustain that profit.
- Brand and Reputation – When risk management systems and controls do fail, what matters is how you respond and manage the event. This policy will help you to ensure your investment in risk transfer includes any support with crisis communications you may need to respond to crises, and protect and rehabilitate your brand.
- Cost Expenditure – Whether incurred by your company or a third party such as a direct customer, the costs to cover labor, transportation, and disposal due to a product recall can be expensive. The policy can be a financial savior in this scenario.
The prime important types of coverage for this insurance are product liability, product recall insurance, property damage, worker’s compensation, and business interruption insurance.
There are a number of additional covers available with this policy, such as cyber liability, equipment breakdown, car insurance, etc. These covers can be bought as per the specific requirement of the insured person by paying an additional premium amount.
Before buying this policy, you need to keep in mind the following factors:
- Coverage Type – Depending on the requirements of the business, the policy coverage will vary. Understand the policy covers, and your business needs, only then go for this policy.
- Limits and Deductibles – Before opting for this policy, go through the exclusions, the limits of the covers, and the percentage of the deductibles thoroughly.
- Premiums – The premium amount for this policy will depend on the aforesaid factors. Calculate the premium amount, and compare it with different insurers, then according to your convenience go for the most suitable one.
- Background of the Insurer – Before choosing a particular insurer, do the background check thoroughly. Look for the claim settlement ratio, reputation of the insurance company, and past history of the insurer.
- Policy Terms and Conditions – An insurance policy comes with different clauses. Understand those terms and conditions of the policy well. Do not keep any grey matter. In this case, you can also take the help of an expert.
A retrospective clause in a vehicle spare parts manufacturers insurance policy provides coverage for claims made during the policy period for incidents that occurred prior to the beginning of the policy. This means that the policy provides coverage for events that occurred before the policy was purchased, up to a certain point in the past.
The Any One Accident (AOA) limit and Any One Year (AOY) limit are terms used in insurance policies to describe the maximum amount of coverage available for a single incident or for multiple incidents within a given time period. The AOA limit is the maximum amount the insurer will pay for claims arising from a single accident, while the AOY limit is the maximum amount that the insurer will pay for claims arising from multiple accidents that occur within a single policy year. For example, 1:2 means that the maximum liability you can claim is half of the sum insured amount for any claim.
Yes, it is possible to buy a product liability policy without a deductible in India. However, it depends on the specific insurance company and the policy’s terms and conditions. Some insurers may offer policies with no deductible or minimum deductible, while others may require a deductible. It is important to understand the policy language and consult an expert to understand the terms and limitations of the coverage.
The insurers that offer auto component manufacturer insurance are:
- ICICI Lombard General Insurance.
- TATA AIG General Insurance
- United India Insurance
- Bajaj Allianz General Insurance
- Reliance General Insurance
- HDFC ERGO General Insurance
- Royal Sundaram General Insurance
- New India Assurance
No, the claim due to the contractual product guarantee will not be covered under the auto component manufacturer insurance policy. Since a contractual product guarantee is an exclusion under this policy so the claim will get rejected. Although, one can include this cover in the policy as an add-on cover.
The following people can buy auto component manufacturer insurance:
- Businessmen who provide manufacturing services to clients.
- Auto spare parts manufacturers
- Automotive components manufacturers.