Tag Archives: settlement

State To State Variability – Statute of Repose

Posted on by

A common theme in many of my blogs is the impact individual state laws or statutes can have on the outcome of a product liability lawsuit.  It is, in my opinion, possible to take the exact set of circumstances of a product liability lawsuit and have different outcomes in different states.  Product liability laws or statutes are created by state legislators and can be very different from state to state.  While there have been attempts to create federal preemption for medical products, all too often state laws continue to prevail over the federal preemptive defense.

One of the state laws that can have a major impact on the outcome of a product liability lawsuit is the Statute of Repose.  The Statute of Repose prevents product liability lawsuits against the manufactures, importers, designers and distributors of products based on the age of the product.  However, only 19 of the 50 states have Statute of Repose laws to protect businesses from product liability lawsuits.  Most of the states that have Statute of Repose laws limit product liability lawsuits somewhere between 5 to 12 years after the sale of a product.  Two states, Arizona and Rhode Island, have found Statutes of Repose laws for products unconstitutional.

One of the industries that is very familiar with Statute of Repose laws and the impact they can have on a product liability lawsuit is the Tree Stand industry.  For example, if a kid where to die or become a quadriplegic in a state with a 10 year Statute of Repose law and the age of the tree stand was 11 years from the date of sale, the manufacture, designer and sellers of the tree stand could be protected from a product liability lawsuit because of the 10 year deadline was exceeded.  However, in another state that did not have a Statute of Repose law, the manufacture, designer and sellers of the tree stand could find themselves named as defendants in a product liability lawsuit and, at the very least, incur discovery and settlement costs and, at the worst, large monetary judgments by a sympathetic jury.

Defense Costs Inside or Outside The Limits of Liability?

Posted on by

When buying a surplus lines product liability insurance policy, you are often presented with product liability quotes that indicate the defense costs are inside the limits of liability.  If you read your proposal or quotes carefully, you will often see the option of adding defense costs outside the limits of liability for an additional 10% premium charge.

Why is this important? Before I can answer this it is important that you first understand what it means to have defense costs inside or outside the limits of liability.  If your defense costs are inside the limits of liability, any lawyer fees, investigation expenses, defense expenses and appeal expenses erode your limits of liability.  In other words, if all these expenses add up to $500,000 and you have a $1,000,000 per occurrence limit on your product liability policy, you only have $500,000 left to pay a judgment or settlement.   If your defense costs are outside your limits of liability, lawyer fees, investigation expenses, defense and and appeal expenses of a claim will not reduce your liability limits.

This may not appear to be a big deal on the surface, but if you had a bad batch of defectively manufactured products, you may find yourself faced with multiple claims.   Recent data indicates the national average cost to defend a product liability claim is $876,000.   A $1,000,000 per occurrence with a $2,000,000 aggregate liability limit could be exhausted very quickly and you could find your business with no limits left to pay the judgment or settlement of additional claims very quickly.

Once the liability limits have been exhausted, your insurance carrier no longer has any obligation to pay any claim, judgment or claim expense or to defend or continue to defend your company.

So when purchasing or renewing your product liability policy, review it carefully and if your defense costs are within the limits of liability, think very carefully about spending an additional 10% to add your defense cost outside the limits of liability.  It could mean the difference between success and failure as a business.

Only In America – $1,500,000 Settlement For Foggy Goggles

Posted on by

I recently read an article in “Gym To The Jury” about a man in Pennsylvania that was awarded $1,500,000 because his goggles fogged while water skiing and he hit a log.

Okay, on the surface this seems reasonable, but what I find extraordinary is the man was not injured while wearing the goggles. He was injured after taking the goggles off.  Apparently, with the goggles in perfect condition the man would have seen the log, but with just the naked it eye he could not see the log.

Another interesting fact that most people know that have ever worn goggles while snow skiing or swimming is - most of the anti-fog goggles on the market will fog if you over exert yourself and begin to sweat.  Heat naturally escapes through the head.  In my opinion, only goggles that have built in fans can be guaranteed to be anti-fog because as heat and humidity build up you need to ventilate in order to remove the heat and humidity from the goggles.

It will be interesting to see what impact this settlement has on goggle industry and the cost of product liability for goggle manufactures and distributors. Will goggle manufacturers be compelled to change the wording on their goggles and packaging from anti-fog to fog resistance? This settlement may provide a precedent for plaintiff attornies to sue when there is an injury on the ski slopes or while water skiing by claiming that the goggles were responsible because they fogged and reduced visability. If this happens the manufacturers and distributors of goggles can expect a huge increase in their product liability insurance premiums.

The next time someone asks why product liability insurance cost so much, just show them this blog article and know that this story is not the exception but the norm in the U.S.

How Purchasing Foreign Liability Insurance May Reduce Your Product Liability Insurance Cost

Posted on by

Many of the U.S. manufactures and distributors that contact me looking for a product liability insurance quote and export products to countries outside the U.S. are often unaware there is often a large difference between U.S. product liability insurance rates and foreign product liability rates.  In many cases U.S. exporters are not always aware that another option exist because local and general agents are not aware of all the options when it comes to product liability.

While it is, in most cases, safe to assume that your insurance policy will cover you in the event you have a foreign product liability lawsuit, it is important to understand that most of the U.S. product liability insurance policies will only cover foreign product liability claims that are brought back into the U.S. courts. 

The problem with allowing foreign product liability claims to be heard in the U.S. courts is it is usually much more expensive than the alternative of having the claim heard in the country of origin.   The first reason for this is contingency fees. In the U.S., lawsuits can be brought with little or no expense to the litigant and therefore, there is no cost to the litigant and no reason not to “roll the dice”.  The result is often frivolous and marginal lawsuits in the hopes of “hitting the jackpot”.  Contingency fees are simply a percentage of settlement or judgment awards so the litigant pays nothing if nothing is won or recovered by the litigant’s attorneys. The second reason is the liberal discovery rules in the U.S.  It has become an art for U.S. law firms to cover-up defendants with discovery materials. The cost for a defendant to comply is enormous. Even when it is obvious that the defendant has no negligence or role in the lawsuit, the defendants’ insurance carriers are often willing to pay thousands of dollars to get their names released from a lawsuit because it cheaper to settle than respond to all the discovery materials. The third reason is punitive damages.  Punitive damages allows the jury to reward further damages on top of compensatory damages.  If a plaintiff can show the defendants behavior was egregious and callous, punitive damages may be awarded.  While in many cases proving gross negligence can be a daunting task, foreign product liability litigants may have the luxury of venue shopping to find more favorable forums or courts in the U.S. to have their cases heard and therefore, increase the chances of finding a more sympathetic jury pool and receiving punitive damage awards.

In summary, for many U.S. exporters of products that are considered very high risk such as chemicals and critical aircraft and auto parts, foreign liability insurance will likely not be available. For all other U.S exporters, when the foreign liability insurance coverage is available it should save you considerable money by have purchasing this insurance and excluding Worldwide coverage on their U.S. product liability insurance policy.