Legal Definitions - design-defect exclusion

Definition: A provision in some insurance policies that excludes coverage for bodily injury resulting from a product's failure to perform its intended function due to a defect or deficiency in its design, formula, specifications, instructions, or advertising materials.

Example: An umbrella policy for a toy manufacturer may have a design-defect exclusion that would not cover bodily injury resulting from a toy's malfunction due to a flaw in its design.

Explanation: This exclusion means that if a product fails to perform its intended function due to a design flaw, the insurance policy will not cover any resulting bodily injury. For example, if a car manufacturer's product has a design defect that causes the brakes to fail, resulting in an accident and bodily injury, the design-defect exclusion would prevent the insurance policy from covering the resulting bodily injury.