Not all bicycles are created equally, but all bicyclists expect that the bicycle is safe to operate for its intended purpose. Let’s return to the hypothetical example in my earlier blog of a bike rider suffering an injury due to faulty hand brakes. Consider a distributor who sold defective brake levers to the bicycle manufacturer, which caused the hand brakes to fail. A lot of potential legal and insurance problems may arise in this hypothetical example, beginning with where the brake levers came from, who knew the brake levers were defective, and when the defect was discovered. The distributor of the brake levers may conclude that all of the liability falls on the manufacturer of the brake levers, and that manufacturer’s insurance policy will provide all of the protection needed. While the burden may end up largely on the brake lever manufacturer, all parties in this product chain (bicycle manufacturer, vendor, bike mechanic, distributor of brake levers, manufacturer of brake levers) will likely be sued and at least have to provide a defense. Products/Completed Operations Liability Insurance would respond to the hypothetical bike rider’s claim for damages, including defense costs, subject to policy terms and conditions.

For any distributors not convinced they need the protection of their own Products/Completed Operations Liability Insurance, beware:

– Not all insurance is created equally. Even being named as an additional insured on a manufacturer’s Products/Completed Operations Liability Insurance policy leaves you at the mercy of that insurer’s policy terms, limits, and conditions. Realize that other unrelated liability claims against the manufacturer’s Products/Completed Operations Liability Insurance policy will erode the limits, potentially leaving reduced or no coverage for your protection.

– If you are importing foreign goods, you, the distributor, may bear the full burden for product liability.

– If you are distributing private-label goods, you, the distributor, bear the full burden for product liability.

– Product recalls may become an expensive and real possibility for which you should seek additional protection in the form of Product Recall Insurance.

YOUR TRUSTED CHOICE INDEPENDENT INSURANCE AGENT at The Richey-Barrett Company (Phone: 440-835-4800) is a crucial link in meeting your commercial insurance needs.