Also called maximum liability method. See independent liability method with which it is compared.

Money purchase scheme that purchases an insurance policy for each member. The proceeds of the policy buys the member’s pension.

ICOB (Chapter 5) requirement that the retail customer should receive key information before the contract is concluded. Retail customers must also have up to date information in the event of changes to policy terms, conditions or the premium. There is also a requirement for product disclosure for commercial customers at the point of sale and renewal. Disclosure for packaged products is covered in ICOB (Chapter 6).

Indemnifies the insured for a proportion of loss due to the payment of extortion demands or for recalling a threatened or contaminated product or destroying such a product.

Covers the insured’s legal liability to replace, rework or recover products that have failed to perform their intended function after delivery to a customer. The policy is claims-made with co-insurance as standard, and product recall as an option. The policy may back up the insured’s written guarantee to his customer for a one-off product such as chemical plant or be used to support a guarantee of a company’s products (e.g. wall ties).

Exclusion of liability arising from ‘products’ supplied by the insured. This can appear both in public liability and professional indemnity policies. The risk is insured under a products liability policy. The dividing line between the products and public liability policies is important. In the public liability policy the exclusion does not apply to products still in the insured’s custody and control.

A product liability exclusion of the cost incurred by the insured in recalling injurious products from customers and distributors. The costs are insurable under product recall insurance. See also PRODUCT RECALL PLAN.