Occurrence Coverage and Why It Matters Here

General liability, including products coverage, is typically written on an occurrence basis. The policy that responds to a products claim is the one in force when the injury occurred, not the one in force when the claim is made. That means a manufacturer current policy is not necessarily the policy that answers for a product made years ago. The practical consequence is that a manufacturer historical policies remain relevant indefinitely. An injury occurring today from a product sold in a prior year generally looks to the policy in force when the injury occurs, but where the injury process began earlier or the trigger is disputed, prior policies can be implicated. This is why old policies have value. A manufacturer that can locate its historical coverage has assets it may need. One that cannot is defending itself and funding the defense from current resources.

• Occurrence coverage responds to injury occurring during the policy period, whenever the claim is made
• Historical policies therefore remain relevant long after they expire
• Injuries alleged to develop over time can implicate multiple policy periods
• A manufacturer that cannot locate historical policies is defending at its own expense

Keep the Historical Policies, Permanently

This is the most concrete and most frequently ignored recommendation in this area. A manufacturer should maintain a permanent archive of every general liability and excess liability policy it has ever held, in full, including declarations, forms, and endorsements, together with evidence of the limits and the carriers. The reasons are practical. Carriers merge, change names, go into runoff, and occasionally become insolvent, and tracing coverage back through those changes is far easier with the policy in hand. A certificate is not sufficient, because the terms and limits are what matter. Brokers change, and broker records are not a reliable substitute for the manufacturer own file. Digitizing the archive, with an index by policy year showing carrier, policy number, limits, and form, converts a box in a basement into something a defense team can use in an afternoon.

• Retain every general liability and excess policy permanently, in full, not just certificates
• Keep premium and audit records that help establish coverage existed
• Track coverage for predecessor entities and acquired product lines
• Digitize and index by year with carrier, policy number, limits, and form

Product Records Are the Defense

Coverage answers who pays. Records answer whether the manufacturer is liable at all, and for a discontinued product the records are the entire case. What a defense needs is evidence of what the product was and what the manufacturer did. Design documentation and engineering change history showing the state of the design at the time of manufacture. Testing records and the standards the product was tested to. The specifications and the suppliers for components. Manufacturing and quality records, ideally traceable to a serial number or lot. Copies of the instructions, warnings, labels, and manuals as they existed at the time, which is frequently the decisive document in a failure to warn claim. Equally important is the post sale record. Any service bulletins, retrofits, upgrades, or safety notices issued, and evidence of how they were communicated.

• Design and engineering change records showing the design at the time of manufacture
• Testing records and the standards applied
• Component specifications, suppliers, and manufacturing and quality records traceable to lot or serial
• Instructions, warnings, labels, and manuals as they existed then
• Service bulletins, retrofits, and safety notices, with evidence of how they were communicated
• Retention measured against product service life plus limitation periods, not tax rules

Discontinued Lines, Sold Lines, and Divested Operations

Three situations create ambiguity that should be resolved in the documents rather than in litigation. Discontinuing a product line does not end the liability. The manufacturer remains the manufacturer. What changes is that the company stops accumulating knowledge about the product, stops receiving field feedback, and often loses the engineering staff who understood it. Capturing institutional knowledge before the people leave is worth doing deliberately. Selling a product line transfers the business and not necessarily the historical liability. Whether the buyer assumes claims for products made before the sale is a matter of the purchase agreement, and whether the seller historical insurance is available to the buyer is a matter of the policies and any assignment the carriers permitted.

• Discontinuing a line does not end the manufacturer liability for it
• Capture institutional knowledge before the engineers who understood the product leave
• Address pre sale product claims and insurance availability explicitly in any line sale
• Decide who keeps the records on a divestiture, and for how long

Talk It Through With a Specialist

Long tail product exposure is managed with an archive and a records policy as much as with a current policy, and most manufacturers have never built either deliberately. We can review how your current program treats products of earlier vintage, check your named insured schedule for predecessor entities, and help you think through what to retain and for how long. Grandbay Financial Services places manufacturing risks across the specialty and surplus lines markets, with leadership bringing 20+ years in commercial insurance. Book a time at calendly.com/grandbayfinancial. This article is for general information and is not a substitute for policy language or professional advice.