Form IL 09 10 - Pennsylvania Notice Product Liability Claims
1. What the form is
Form IL 09 10, titled "Pennsylvania Notice Product Liability Claims," is a mandatory notice that must be attached to insurance policies issued for risks located in Pennsylvania. Its primary purpose is to inform policyholders about the provisions of Pennsylvania's "Insurance Consultation Services Exemption Act." This Act generally limits the liability of an insurance company, its agents, employees, or service contractors for damages (such as injury, death, or loss) that might arise from any act or omission in connection with providing, or failing to provide, services aimed at reducing the likelihood of such occurrences. These services can include surveys, consultations, or inspections. The notice also clearly outlines specific situations where this statutory exemption from liability does not apply.
2. Classes of business it applies to
The instruction included with a version of this form (IL 09 10 07 02) specifies that the "Pennsylvania Notice" should be attached to all new and renewal certificates insuring risks located in Pennsylvania, indicating broad applicability across various lines of business. While the form's title specifically mentions "Product Liability Claims," the notice's content addresses the "Insurance Consultation Services Exemption Act," which pertains to any consultation services an insurer might provide to reduce the likelihood of injury, death, or loss, not solely those related to product liability.
However, given its title, this form is particularly pertinent for any commercial insurance policy where product liability is a significant exposure or where the insurer might offer loss control services related to the insured's products. Examples of businesses where this form would be highly relevant include:
- Manufacturers: Businesses producing any type of goods, such as industrial equipment, consumer electronics, children's toys, automotive components, or food and beverage products.
- Distributors, Wholesalers, and Retailers: Companies involved in the chain of commerce that sell products to other businesses or directly to consumers.
- Service-Oriented Businesses with Product Sales: For instance, a restaurant that sells branded sauces, or a salon that retails hair care products.
- Importers and Assemblers: Businesses that bring products into the market or assemble components into finished goods.
- Pharmaceutical and Medical Device Companies: Due to the inherent risks associated with their products.
3. Special considerations
- Mandatory Attachment: This notice is a required component for new and renewal policies in Pennsylvania. Omitting it could potentially affect an insurer's ability to claim the protections offered by the Insurance Consultation Services Exemption Act.
- Exceptions to Liability Exemption: The immunity provided by the Act is not absolute. The notice details critical exceptions where the insurer (or its representatives) could still be held liable :
- If the injury, death, or loss happened during the actual performance of the consultation services and was directly caused by the negligence of the insurance company or its representatives.
- For consultation services that are required to be performed under a written service contract that is not related to a policy of insurance.
- If any acts or omissions by the insurance company or its representatives are judicially determined to be a crime, actual malice, or gross negligence.
- Pennsylvania Product Liability Law Context: It's important to remember that Pennsylvania has a complex body of product liability law. Lawsuits can arise from theories of strict liability, negligence, or breach of warranty, often focusing on defective design, manufacturing flaws, or inadequate warnings. Pennsylvania generally applies a two-year statute of limitations for product liability claims from the date of injury, with some exceptions. Unlike some states, Pennsylvania does not have a broad statute of repose for most product liability claims, though a 12-year statute of repose can apply to claims related to improvements to real property.
- Real-World Example (Exemption Not Applying): An insurer's loss control specialist inspects a new piece of machinery at an insured's factory and negligently advises that existing safety guards are sufficient. An employee is later injured due to the inadequacy of these guards. The injury occurred directly due to the negligently performed consultation service during its actual performance.
- Real-World Example (Exemption Potentially Applying): An insurer provides a manufacturer with general safety pamphlets on material handling. An employee is injured in a lifting accident. While the pamphlets might have contained relevant information, if there was no specific negligent act by the insurer during an actual inspection or consultation directly causing this specific injury, the exemption might apply to protect the insurer from liability related to the general provision of safety information.
4. Key information for agents and underwriters
- Compliance is Key: Agents and underwriters must ensure this notice is consistently included with all Pennsylvania policies as mandated. This is a fundamental operational requirement.
- Risk Assessment Unchanged: The notice provides a degree of protection for the insurer regarding its consultation services. It does not alter the fundamental product liability risks associated with the insured's actual products or operations. Underwriters must continue to diligently evaluate the insured's product design, manufacturing quality control, warning labels, and overall product safety programs.
- Loss Control Service Delivery: When insurers provide detailed, hands-on loss control or safety engineering services, especially if documented under separate service agreements, they should be aware that the potential for direct liability due to negligence in performing those specific services remains, as outlined in the notice's exceptions. Careful documentation of all consultations, advice, and recommendations is crucial.
- Agent Communication: Agents should be aware of this notice and be prepared to generally explain its purpose to Pennsylvania clients. It's important to clarify that the notice pertains to the insurer's liability for its ancillary consultation services and does not reduce the insured's own responsibility for product safety or the scope of their product liability coverage.
- Underwriting Guidelines: Underwriting departments should ensure that staff, particularly those involved in recommending or coordinating loss control services for Pennsylvania insureds, understand the Insurance Consultation Services Exemption Act and the specific terms of this notice. This includes recognizing the distinction between providing general safety information and offering specific consultative advice that could, if negligently rendered, fall under an exception to the liability exemption.
- No Direct Pricing Impact on Insured's Coverage: The inclusion of this notice itself is unlikely to directly affect the premium for the insured's product liability coverage. Pricing for that coverage will continue to be based on the nature and risk profile of the insured's products and operations.