Prototype insurance glossary
The terms you will meet on prototype liability product pages, applications, policies, and certificates of insurance, each defined with a citation to the source of the definition.
Prototype insurance
There is no standard standalone product by this name. The term is used here for how prototype liability is typically addressed through commercial general liability insurance, and the question is whether prototypes fall inside the policy definition of your product.
Source: Risklytics: product liability for hardware startups; IRMI: commercial general liability policy (CGL)
Commercial general liability (CGL) insurance
Coverage designed to protect a business against a wide range of liabilities, centered on bodily injury and property damage claims from the business operations or premises, plus personal and advertising injury and products-completed operations.
Products-completed operations
One of the hazards ordinarily insured by a general liability policy. IRMI defines it as liability arising out of the insured products or business operations conducted away from the insured premises once those operations have been completed or abandoned.
Premises and operations
The part of Coverage A that covers liabilities occurring on the business premises or as a direct result of its operations, from accidents inside the business facilities to damage caused by the business activities at a client site.
Pre-commercial product
A product not yet released for sale, including prototypes, pilot units, and R&D units. Policies written for finished goods can exclude pre-commercial products.
Finished-goods policy
A policy written for products released for sale. Policies written for finished goods can exclude pre-commercial products, prototypes, and R&D units.
Bodily injury
IRMI defines bodily injury as bodily harm, sickness, or disease, including resulting death.
Source: IRMI: bodily injury
Property damage
IRMI defines property damage, as defined in the general liability policy, as physical injury to tangible property including resulting loss of use and loss of use of tangible property that has not been physically injured.
Source: IRMI: property damage
Occurrence
In the CGL form, an accident, including continuous or repeated exposure to substantially the same general harmful conditions. Under an occurrence form, coverage applies to bodily injury or property damage that occurs during the policy period, regardless of when the claim is first made.
Claims-made policy
IRMI defines a claims-made policy as coverage triggered when a claim is made against the insured during the policy period, regardless of when the wrongful act that gave rise to the claim took place, subject to any retroactive date.
Source: IRMI: claims-made policy
Retroactive date
In a claims-made policy, the date before which wrongful acts are not covered. IRMI notes that when a retroactive date applies, the wrongful act that gave rise to the claim must have taken place on or after the retroactive date. The date itself is set in the policy declarations.
Source: IRMI: claims-made policy
Each occurrence limit
The most the insurer will pay for all damages paid within Coverage A, including all expenses paid within Coverage C, for any one occurrence. It is a sublimit in the sense that payments under it also reduce the applicable aggregate limit.
General aggregate limit
The most the insurer will pay during the policy period for damages under Coverage A, except damages arising out of products-completed operations, plus damages under Coverage B and expenses under Coverage C. Once exhausted, the insurer has no further obligation for claims within that limit for the rest of the policy period.
Products-completed operations aggregate limit
The most the insurer will pay during the policy period for damages because of bodily injury or property damage arising out of the products-completed operations hazard. It applies independently of the general aggregate limit, so damages paid under one do not reduce the other.
Additional insured
IRMI defines an additional insured as a person or organization not automatically included as an insured under an insurance policy who is included or added as an insured under the policy at the request of the named insured, commonly to comply with a contractual agreement.
Source: IRMI: additional insured
Certificate of insurance
IRMI defines a certificate of insurance as a document providing evidence that certain general types of insurance coverages and limits have been purchased by the party required to furnish the certificate. It is evidence of coverage, not the policy itself, and it does not add anyone as an insured.
Source: IRMI: certificate of insurance
Duty to defend
IRMI defines duty to defend as an insurer obligation to provide an insured with a defense to claims made under a liability insurance policy, generally broader than the duty to indemnify. The duty may exist even where coverage is in doubt and ultimately does not apply.
Source: IRMI: duty to defend
Vendors endorsement
An endorsement naming a distributor or reseller for claims arising from your product. It arrives once you sell through a channel.
What this page relies on
- [1] Risklytics: product liability for hardware startups: https://www.risklytics.ai/guides/product-liability-for-hardware-startups/
- [2] IRMI: commercial general liability policy (CGL): https://www.irmi.com/term/insurance-definitions/commercial-general-liability-policy
- [3] IRMI: products-completed operations: https://www.irmi.com/term/insurance-definitions/products-completed-operations
- [4] IRMI: bodily injury: https://www.irmi.com/term/insurance-definitions/bodily-injury
- [5] IRMI: property damage: https://www.irmi.com/term/insurance-definitions/property-damage
- [6] IRMI: how the limits apply in the CGL policy: https://www.irmi.com/articles/expert-commentary/how-the-limits-apply-in-the-cgl-policy
- [7] IRMI: claims-made policy: https://www.irmi.com/term/insurance-definitions/claims-made-policy
- [8] IRMI: additional insured: https://www.irmi.com/term/insurance-definitions/additional-insured
- [9] IRMI: certificate of insurance: https://www.irmi.com/term/insurance-definitions/certificate-of-insurance
- [10] IRMI: duty to defend: https://www.irmi.com/term/insurance-definitions/duty-to-defend