We write a wide range of risks, such as:

• Air and water purification systems



• Automotive parts



• Chemical manufacture and distribution



• Organic cosmetic, skin-care and hair products



• Diagnostic medical equipment, hospital and surgical supplies



• Exercise equipment



• Farm machinery



• Industrial pumps



• Material-handling equipment



• Mining supplies



• Precision machine parts and machine tooling



• Restaurant fire protection equipment



• Safety belts and harnesses for the construction industry



• Sports equipment



• Wheelchairs, walkers and ambulatory aids

• Policy limits in Canadian currency



• Premises, operations, product liability and acts of independent sub-contractors



• Bodily injury



• Personal injury, including false arrest, invasion of privacy, wrongful imprisonment, libel, slander and discrimination where not prohibited by law



• Broad-form property damage, including loss of use



• No errors and omissions (E&O) exclusion in most cases



• Environmental exclusion — hostile fire form



• Cover for intentional injury in defence of property or persons



• Incidental malpractice cover for liability arising from emergency first aid treatment



• Contingent employers liability



• Tenants legal liability — named perils or all risks cover available



• Blanket written contractual liability cover



• Your directors, officers and employees included as insureds



• Owned and non-owned watercraft up to eight metres in length



• Automatic 30-day cover for newly acquired companies



• Policy territory includes premises in Canada and the U.S.; for product sales anywhere in the world, cover applies provided suits are brought in North America



• Attached machinery coverage on automobiles



• Cross-liability and severability of interests

• Court awards in the U.S. are the highest in the world. Huge sums may be awarded for damages, often in circumstances that would not result in damages if the trial were held in Canada or elsewhere in the world.



• U.S. courts tend to favour the plaintiff. American courts have innovated legal doctrines such as class actions, strict liability and comparative negligence. As a result, a manufacturer may have to compensate a victim, even in the absence of fault.



• Rather than merely compensate injury victims, U.S. juries tend to use awards, including awards for punitive damages, to punish a corporate defendant whose actions are seen to be wanton or grossly negligent.



• Some of the most volatile venues are so unpredictable that defence counsel will often recommend huge pre-trial settlements to avoid going to trial.



• U.S. trial lawyers have become much more informed about Canada. Thanks partly to NAFTA, Canadian corporations have become more visible and attractive defendants.



• A Canadian defendant may no longer disregard an action commenced in the U.S. If the plaintiff wins a default judgment in a local jurisdiction, NAFTA rules permit the plaintiff to apply to a Canadian court to order enforcement of the default judgment.



• This elevated risk doesn't just affect exporters of manufactured goods — premises, transportation, employment practices, errors and omissions, and directors and officers risks are also much higher in the U.S.

• Don't underestimate the unpredictability of U.S. jury decisions and the high cost of defending U.S. lawsuits.



• Investigate whether local distributors can provide a secure indemnity agreement, affordable local product cover, or both.



• Don't rely on the "corporate veil." to insulate your clients from U.S. litigation. Even if your client doesn't have offices or assets in the U.S., recent rulings have greatly reduced statutory protection from U.S. court judgments.



• Urge clients to consider the cost of product liability cover before seeking U.S. sales. The export business plan should fully assess the long-term risk of litigation, especially for long-life products. Recommend suitable cover for the likely lifetime of the product.



• Uninsured exporters should develop a contingency plan for a defence strategy with a knowledgeable lawyer and adjuster.



• For the last five years, market conditions for commercial insurance have been generally very competitive, which may give the impression that litigation trends are stable. Unfortunately, they're not.

No premium tax is payable on out-of-province exposures. To justify the non-taxable status of that portion of the premium applicable to out-of-province exposures, those portions must be identifiable. In the case of premiums determined on an estimated sales or payroll basis, subject to final adjustment, it is suggested that the policy specifically show the estimated split and rates charged under the following headings

• Ontario



• Remainder of Canada



• U.S. or other foreign exposures

• Completed product liability questionnaire (preferably typed)



• Audited financial statement



• Sales breakdown for the last five years



• Claim record



• Brochures and product safety information, (including UL, CSA, OSHA, ISO9000 or other safety certification).



• Preparation is vital. You'll need to get your submission right the first time. As underwriters get fussier, a poor submission won't get a second chance.

It isn't just current products that pose a liability risk. Discontinued products, especially durable industrial products such as presses, can pose a serious risk for 20 years or more. Searching out discontinued products can be difficult, especially with a risk that has a history of acquisitions. Be aware of and disclose any discontinued products, even if they have no recent loss history.

The insurer may require your client to fund any loss reserves within the SIR with an indemnity agreement or banker's letter of credit. Review your client's current financial statement and evaluate the impact of such requirements against other financing needs.

Weigh the size of the SIR against the affordability of total limits. For a client with a low claim frequency, a $10-million limit and a $250,000 SIR may be a better deal than a $1-million limit with a $2,500 SIR at the same premium. Because large losses are so much more common in the U.S., the combination that provides the highest total limits usually provides the best protection.

Consider the benefits of the claims-made policy. Although many brokers are wary of the claims-made policy from a coverage point of view, its endearing benefit is that it encourages insurers to assume tough risks that they would routinely decline on an occurrence form. The claims-made policy may be the only way to go for clients with tough products in the chemical or environmental area, and can have a stabilizing influence from a marketing point of view.

U.S. retailers are demanding evidence of product liability insurance from their suppliers, often for limits of US$2 million to $5 million. Just like in the mid-‘80s, some clients may elect to self-insure their U.S. products exposure rather than pay a significantly increased premium.

We have seen some recent cases where the Canadian insurer is so nervous about the U.S. product exposure that the insurer wouldn't offer a premises liability policy — even with a full products exclusion.

It may be necessary to seek cover from insurers who are not licensed in Canada. Review and follow all the rules in your province governing the use of unlicensed insurers, including additional tax and excise rules. Exhaust local licensed markets before you back an unlicensed insurer.

If you are thinking of supporting an unlicensed insurer, choose only an insurer with an established business reputation and financial statement. Avoid fraudulent offshore insurers. For U.S. insurers, Best's "A" rated companies are preferred.

The increasing deference Canadian judges show to foreign courts is a direct consequence of the globalization of business. When deals are done across international boundaries, there must be a way to put teeth in them. Enforcement will follow, even when foreign judgments are obtained under different legal rules than ours. For example:

• An Ontario judge recently enforced a verdict of about Cdn$9 million against the Canadian owners of a waste disposal site near Detroit. A Michigan court awarded the sum to the U.S. Environmental Protection Agency for reimbursement of their clean-up costs, but the Canadian firm's lawyers forced the Michigan subsidiary into voluntary bankruptcy.

  In his ruling the judge said, "The defendants chose to engage in the waste disposal business in the U.S., and the judgments at issue here go no further than holding them to account for the cost of remedying the harm their activity caused." The defendants were ordered to pay Cdn$6.2 million plus interest.




• A company imported chain into Canada and then resold it in the U.S., where it ended up being installed on a truck tailgate, according to Toronto lawyer Wynton Semple, a partner at Zammett, Dash and Semple. Two Arizona residents who were allegedly injured when the gate fell open claimed that the chain was defective. They sued everyone who had dealt with it, right back to the Canadian distributor. Even though the importer was only remotely connected to the injury, "he must take this seriously and be put to the expense and trouble of retaining counsel," Semple said. "Failure to do so could mean a default judgment from Arizona that would be fully enforceable in Canada."



• Another company started negotiations with a Texas company on a joint venture, but the deal fell apart. However, the Texas firm believed that an agreement had been reached and sued for lost future profits, although the client had no place of business in Texas and hadn't sold anything there. Since the defendant was non-resident, the plaintiff merely had to send a copy of the lawsuit to the Texas secretary of state, who fortunately forwarded it by regular mail. The case cost the company more than US$100,000 in legal fees, while the Texans' lawyer is working for a contingency fee — something quite rare in Canadian commercial law. "The plaintiffs have no costs exposure here at all. If they win, they win, and if they lose, they don't lose," Semple said.

In addition, Graham said that judges are "getting more and more willing to enforce foreign judgments, and this is going to mean American judgments obtained under very different circumstances will be more enforceable here."

Summary enforcement of foreign judgments has the virtue of simplicity, he added. "If you're going to do business in the U.S., you have to recognize you're buying into the legal system — and you'd better be prepared to do that. It's a cost of doing business."

Lawyer John Swan of the Toronto firm of Aird & Berlis added, "American courts assert jurisdiction over foreign defendants under what's called `long-arm' jurisdiction, but the foreign court must meet the ‘due-process standards' of the U.S. 14th Amendment for enforceability here."

But if the foreign court has behaved "properly, decently and fairly," its judgements will generally be enforced in Canada.

Based on an article in The Financial Post,

Tuesday, November 7,1995 by

Toronto lawyer and writer Michael FitzJames.

• Capacity up to $25 million for most risks



• World-wide cover with suits brought in North America



• If Canadian premises and products are already covered, we can write product cover for the foreign sales only



• Advertising liability cover



• Employee benefit liability cover



• Vendor liability cover



• Employers liability cover



• Product manufacturers E&O cover



• Property, inland marine covers, including transportation risks



• IBC2313 form of environmental exclusion—provides cover for sudden events on a 120-hour form; alternatively we can provide broader cover for pollution events on a separate stand-alone form

The information in this web site is intended to be general in nature and should not be construed as specific recommendations, nor as a substitute for the advice of a professional insurance broker who is familiar with a client's particular exposures or circumstances.

The coverage summary should not to be construed as an insurance policy or the interpretation of an insurance policy.

Mr. Ian Campbell Commercial Claims Resolutions, A Division of Shumka Craig & Moore Adjusters Canada Ltd. 320 Pinebush Road, Unit 9 Cambridge, Ontario N3C 2V3 tel: (519) 620-1558 toll free: 1 (866) 353-3031 fax: (519) 620-1714 email: icampbell@scm.ca website: http://www.scm.ca/

The reporting condition of the policy requires that you report to the insurer any incidents which might give rise to a claim, even though no such claim has yet been received.

Liability claims for this class of business may often follow months or years after the event itself. Failure to report an incident promptly may jeopardize the insurer's investigation and defence of a subsequent legal action. To avoid the risk that individual losses may be denied as a result of late reporting, we would encourage you to report all such incidents promptly.

Please note that if your policy is written on a claims-made form, the policy contains certain restrictions which limit the reporting of losses after the policy has expired.