Why we all need product liability and comprehensive insurance
A forest fire claim has been instituted in the US federal court by an insurer against a motor manufacturer alleging that a defective off-road vehicle sparked a blaze that consumed 7 000 acres and destroyed 122 homes. The allegation is that the vehicle was defective because it had, to the knowledge of the manufacturers, a defective skid pad that allowed brush to accumulate and catch fire.
Sixty seven thousand similarly designed 2010 models had been recalled but not the 2009 model. The driver negligently drove through a drought-stricken area sparking the fire which he spread by continuing to drive.
The claim is a subrogated claim for $300 000 in damages caused to an insured property damaged by the fire. There is clearly a potential for many more such claims if this one succeeds. The manufacturers say that the vehicle met and exceeded all applicable federal safety standards.
There is always a potential for these open-ended claims and class actions. The importance of product liability insurance and comprehensive motor insurance cannot be over-emphasised.
First published by: Financial Institutions Legal Snapshot
