Are you aware there is often a big difference between rates of foreign and U.S. Product Liability Insurance? Many U.S. exporters don’t know this because local and general insurance agents are not aware of all the options.
In most cases it’s safe to assume that your insurance policy will cover a foreign Product Liability lawsuit. But it’s important to understand that most U.S. Product Liability Insurance policies will only cover foreign claims that are brought into the U.S. courts.
The cost of having a Product Liability claim heard is usually higher in U.S. courts than in the country of origin.
The first reason is contingency fees. In the U.S., lawsuits can be brought with little or no expense to the litigant, which is a reason not to “roll the dice.” This often results in frivolous lawsuits looking to “hit the jackpot.” Attorney contingency fees are simply a percentage of the settlement or judgment awards. The litigant pays nothing if nothing is won or recovered.
The second reason is our liberal discovery rules. U.S. law firms have perfected the art of burying defendants with discovery materials. The cost for a defendant to comply is enormous. Even when it is obvious the defendant has no role in the lawsuit, the defendants’ insurance carriers are often willing to pay thousands of dollars to get their names released from a lawsuit. It’s cheaper to settle than respond to all the requests for discovery materials.
The third reason is punitive damages, which the jury is allowed to award on top of compensatory damages. If a plaintiff can show the defendants’ behavior was outrageous and callous, punitive damages may be awarded.
Proving gross negligence can be a daunting task. Foreign product liability litigants may have the luxury of venue shopping to find more favorable courts in the U.S. to have their cases heard. This can increase the chances of finding a more sympathetic jury pool and receiving punitive damage awards.
For many U.S. exporters of products considered very high risk, such as chemicals and critical aircraft and auto parts, Foreign Liability Insurance will likely not be be an option. For all other U.S exporters, when Foreign Liability Insurance coverage is available it should save you considerable money,.
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