When your business ceases to trade, what insurance should be maintained?

Remember just because a business closes and/or ceases to trade, it does not mean it’s exposure to risk also ends.

The business and directors and shareholders may still have a liability exposure in relation to products sold, serviced, repaired, installed, imported or manufactured.

Public and Products Liability insurance policies are triggered by the occurrence of personal injury and/or property damage during the period of insurance. If you cancel the policy and a claim is made against you by a person who suffers personal injury and/or property damage after the date of cancellation of the policy, you will not be able to claim under the policy. It is irrelevant when the product was sold or the allegedly defective work was done.

In a recent claim, a kitchen manufacturer/installer installed a wall cabinet in 2013. In 2016, it fell from the wall damaging the cabinet as well as the kitchen benchtop it fell onto.

The insured had some months ago “closed” the business and their policies were cancelled. As a result, there was no cover in place when the damage occurred.

Although run-off cover is more commonly required for professional liability exposures, it’s not unusual for it to be contractually required for public and products liability risks.

If you are still unsure, talk to our team on 1300 046 787, to discuss your requirement.

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