Other Than Life (OTL) Practice Exam

Which policy would protect a manufacturer if a product causes damage due to a defect?

1. Products and Completed Operations

2. Contractual Liability

3. Premises and Operations

4. Owners' and Contractors' Protective Liability

The correct answer is: Products and Completed Operations

A policy specifically designed to protect against liabilities arising from products that cause harm or damage due to defects is the Products and Completed Operations coverage. This type of insurance is essential for manufacturers because it provides financial protection against claims for bodily injury or property damage resulting from products that were sold or completed by the manufacturer. If a defect in the product leads to a lawsuit or a claim for damages, this coverage would help cover legal fees, settlements, or judgments. The other options do not address this specific risk directly. Contractual Liability covers obligations that one party has agreed to uphold in a contract, which does not inherently protect against product defects. Premises and Operations coverage is more focused on incidents that occur on the business premises or as a result of operations, which is not tailored specifically for product-related issues. Lastly, Owners' and Contractors' Protective Liability is intended to protect the hiring owner or contractor from liabilities arising from the work of subcontractors, rather than protecting manufacturers from claims related to their own products. Thus, the Products and Completed Operations policy is the most relevant and appropriate choice for the situation described.