What Is a Vendor's Endorsement Policy?

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Definition of a Vendor's Endorsement Policy

Manufacturers and distributors often purchase general liability policies for the selling and distribution of their goods. In addition, they may purchase what is called a vendor’s endorsement to provide coverage for product liability beyond what is held by the vendor of the product.

What Are the Benefits of a Vendor’s Endorsement Policy?

Having a vendor’s insurance policy provides additional confidence for the vendor of the manufactured and distributed product because a vendor’s endorsement precludes product liability claims against the vendor from driving up insurance premiums of the general insurance policy. 

For instance, it is common for vendors to require as a prerequisite that the manufacturer or distributor purchase a vendor’s endorsement of an amount of $3 million.

What Are the Costs of Owning a Vendor’s Endorsement Policy?

In deciding to obtain a vendor’s endorsement policy, the manufacturer or distributor has two options. The first option is to cover all vendors doing business with the manufacturer and distributor for a total not to exceed 7.5% of the General Insurance Policy. The second option is to cover individual vendors for $100 to $250.

What Are the Limits of a Vendor’s Endorsement Policy?

A vendor’s endorsement policy has its limitations and include the following:

Should I Contact an Insurance Attorney?

A business lawyer can help you determine if it is advantageous for you to purchase a vendor’s endorsement policy. Based on the industry that one’s business operates in, a qualified legal professional specializing in insurance policies can determine the boundary of coverage recommended for your particular business product.

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Last Modified: 07-14-2014 03:25 PM PDT

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