Professional Indemnity FAQ

Manufacturer's Errors and Omissions

Why Commercial Manufacturer E&O Insurance?

Errors and Omissions (E&O) is an often under-considered exposure for Manufacturers, thinking “I won’t have a claim for that”. However, a rise in the cost of litigation due to product and service disputes is now forcing manufacturers to rethink their insurance requirements.

So why are we seeing an increase in lawsuits?

  • More and more customers are willing to sue long-established business partners for performance and service failure problems.
  • Increases in the average size and length of contracts raise the risk of litigation, which a performance or service failure ‘may be worth the fight’ and results in a large award.
  • As market competition continues to increase, there is a greater chance that marketing and sales pressures will invite over-promising of supplier capabilities.
  • Today, companies are crossing borders to conduct business, which brings a host of new exposures due to foreign laws and regulations.

If you have a client in the manufacturing and / or fabrication industry, take a look at these scenarios and ask yourself whether you have the proper insurance protection.

Defective Part

Damages: $1.6M       Defence and Investigation Expenses: $65,000

A metalworker designed and manufactured a part used in air compressors. The part allowed a slight leak to develop in the compressor, requiring the company to inspect and replace hundreds of compressors. The metalworker was sued for lost revenue due to the defective part.

Substandard Raw Material

Damages: $500,000       Defence and Investigation Expenses: $75,000

An injection moulder of food containers for dairy products erroneously used an inadequate grade of low-density polyethylene in the manufacturing of container lids. As a result, the lids failed to provide a snug seal when displayed or stored at low temperatures, making an entire shipment unacceptable for its intended use. The dairy company sued the mould manufacturer for lost revenue.

Faulty Packaging

Damages: $200,000       Defence and Investigation Expenses: $45,000

A plastics packaging company did not include a warning notice in one batch of headphones it packaged for a client. The batch could not be specifically identified and, therefore, all of the headphones had to be taken off the shelves. The packaging company was sued for lost revenue and expenses.

To learn more about Manufacturers Errors and Omissions coverage, please contact us.

Latest News

CPR Insurance wins Brokerage of the year

CPR Insurance Services picked up the award for the Best Brokerage (1-5 staff) in Australia, last Friday Night (4th May 2018) at the Insurance Business Magazine Awards held at the Westin in Sydney.

Judging came from various parts of the industry. It is a great honour to be recognised for our hard work and particular Business values we follow. A full list of winners is listed here.

Success comes from having great staff, and we thank Aidan Harmer and Julia McLauchlan as important support staff for helping us win such an award.

CPR Insurance has been in operation for more than 7 years now and is only successful because of the wonderful support from our staff, insurers and most importantly, our fantastic clients who put their faith and trust into our company to be their Risk Advisers and Brokers. 

Thank you to all.

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Robert Cooper - Elite Broker again

We are pleased to announce that once again Insurance Business Magazine has recognised Robert Cooper amongst the top Elite Insurance Brokers in Australia. See here

It is the fourth time in six years Robert has received this honour.

It is a great recognition for CPR Insurance Services who strive to provide the best possible standard of customer care and service to assist obtaining the best possible cover at the best possible price to meet the needs of for our clients.

Such awards are not possible without the outstanding support provided in the office by Julia, Aidan and Mandy, along with the fantastic support our clients continue to show to us. Thank you to all.

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