Investor's wiki

Batch Clause

Batch Clause

What Is a Batch Clause?

Batch Clause is a policy provision of product liability insurance that limits coverage to claims originating from defective products from a specific production cycle. A batch clause hence just covers things created during a specific production run throughout a specific time span, alluded to as a "batch".

Grasping Batch Clause

Proficient liability policies might have a batch clause that limits the amount of deductible that can apply to an event, like a defective product, no matter what the number of claims petitioned for damages brought about by that product. This prevents the policyholder from being required to believe each claim to be a separate occurrence. This may be the case assuming the policy language says that the deductible is on a "per occurrence" basis. On the off chance that the deductible is on a "per claim" basis it applies to each claim made, and that means that the insured should pay more money from cash on hand assuming different claims are made.

In certain states, laws don't permit different claims to be treated as part of a similar occurrence. This can lead to the insured eventually not having coverage relying upon how high the deductible is relative to the amount of the claim. Companies might get around this by mentioning an annual aggregate deductible, which limits the total amount of deductible that the insured should pay during a given time span.

In the event of claims, insurance companies and policyholders might quarrel about what comprises a "batch". This is on the grounds that the insurer needs to consider a batch to fall under a short time span, which expands the number of periods open to the deductible. To prevent litigation over this type of contention, policyholders need to guarantee that the language of the policy carefully characterizes what is viewed as a batch and what is viewed as an occurrence.

Here is a commonplace batch clause:

"It is thusly declared and agreed that all claims made against the Insured and emerging from a similar reason will be considered as one accident and as having been made against the Insured during the policy period wherein the main claim was made against the Insured or the principal notice given by the Insured to the Insurer to the effect that there would be such possibility of a claim being made against the Insured."

This phrasing passes on much not entirely clear and batch case claims can be complex, including a string of claims that could possibly be connected.