Batch Clause

Categories: Insurance, Banking

Product Liability Insurance will often have a policy provision known as a "batch clause," which will limit coverage to only the claims which are received regarding defective items, or products which are manufactured during a specified time of production (also known as a batch).

The function of this clause is usually to limit their exposure to a large number of claims which all result in the same event, or "batch" of production. So if a security alarm company makes a batch of 10,000 alarms which don't actually make any noise, resulting in the hooligans of the world having a free-for-all with their neighbors' respective valuables, the batch clause will limit the deductible amount that can apply to the event, irrespective of how many claims for damages are received as a result of the defective product (in this case, 10,000).

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