Efficacy insurance provides protection against the legal liability for injury or property damage claims made against you by third parties (including customers and members of the public) which arise from your product failing to perform its intended function.

Efficacy insurance is usually included as standard within Public Liability insurance policies, but for some particular trades or products, the efficacy exposure is too high and insurers will apply an exclusion to the policy.

Some insurers choose to “remain silent” on efficacy cover i.e. they do not specifically exclude it. But if there is any doubt the position should be checked with the insurer.

An example of an Efficacy exclusion in operation is below:

A general builder installs an RSJ lintel to support a load bearing wall. The RSJ is of the wrong specification and is not strong enough to support the wall. The RSJ fails and one side of the building collapses. If there was an efficacy exclusion within the builders policy, the insurers would not pay for the damage to the house. This is because the product (the RSJ) did not fulfil its intended purpose of supporting the load bearing wall.

Construction Risks UK have been writing Public Liability insurance for a number of years for many types of businesses in the construction sector and are able to advise on efficacy cover so that your business is protected.

Talk to us today to learn about how to protect your business.