Business Risk Exclusion
Definition of 'Business Risk Exclusion'A type of coverage that is often omitted from product liability insurance. Business risk occurs when a company manufactures or sells a product that does not meet the level of performance that the company promises. For example, if a company advertises a product as having a life span of 10 months but the product only lasts 6 months, the policy does not cover the company.It is sometimes referred to as "product failure exclusion". |
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Investopedia explains 'Business Risk Exclusion'The only exception to business risk exclusion is bench error. Bench error is an error made during the manufacturing of a product. If a business can prove that the failure of a product is due to bench error, then that business will be covered under a product liability policy. |
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