What is Efficacy insurance cover? Does the manufacturer not cover that?
Efficacy Insurance is designed to cover the failure of an item to perform its intended function.
It is commonly required by businesses involved in the manufacture, service, supply or installation of performance critical products such as fire alarms, intruder alarms, emergency lighting, fire extinguishers, etc. Trades involved with fire, security or electrical contracting will often have to prove they have Public Liability and Products Liability which includes Efficacy cover before they are granted a contract.
Efficacy cover is normally a standard exclusion applied to Product Liability insurance policies in respect of failure of a product to perform its intended function. Product Liability is there to cover injury or property damage caused by the product, not if it has failed to deliver the results.
Products Liability is not intended to be a “Manufacturers Guarantee”, it is intended to cover negligence caused to third parties for personal injury or property damage, but not contractual liabilities, such as a warranty that a product will perform.
Where the key risk of a product is non-performance, such as failure to prevent injury or damage, it is highly advisable to check how the policy provides efficacy cover for its intention should still to be able to cover injury or property damage caused to another party.
Efficacy insurance is usually purchased as an extension to Products Liability or Public Liability insurance as it provides cover against the legal liability for injury to third parties or damage to third party property arising from a product or service failing to perform its intended function. A manufacturers’ guarantee will normally not provide this cover as the guarantee is there to only repair or replace the product if something goes wrong with it within a set amount of time after it has been purchased.
Get the right cover if you are installing performance critical products. Don’t skimpt by accepting just basic Public/Products Liability cover…..ensure your quote / renewal includes an efficacy extension or talk to the experts at S.A. Faughnan (Brokers) Ltd. who will do it!