As a manufacturer of products, have you ever sat down to think of what could happen if a consumer of your product gets hurt from using them? If you haven’t, then you have to start thinking about it and making steps to protect yourself.
The business world today is a lot more complicated than what it used to be several years ago. There are now so many manufacturers and a lot of different products out there and the competition is so stiff that companies cannot really afford to leave themselves unprotected from unforeseen circumstances.
Sometimes, product liability claims happen not because you have done something or failed to do something, it might just be one of your competitor’s strategy to distract or take you out of business. Therefore, you must be proactive by being the smarter one and getting Product liability insurance. It also doesn’t matter if you are a small business owner, if you produce anything at all that other people use, product liability insurance is a prerequisite for your business.
Product liability insurance is one of the ways that business owners, especially manufacturers protect themselves from the complications that may arise from people getting injured or their properties getting damaged as a result of using the company’s products. Product liability insurance became very popular in the later part of the 20th century and since then a lot of companies have embraced it.
Well, a lot of people tell you why you must get product liability insurance and how you can get it but nobody tells you how to handle the situation when claims arise. The way you handle product liability insurance claims is very important because you have two things on the line- your business reputation and the money you may be asked to pay as settlement.
While the insurance company may be able to reduce the financial burden, they really can’t do much for the image of your business so the duty rests on you to protect your business and handle the claims smartly so that it goes away without becoming a legal battle which the press would feed on.
To avoid product liability insurance claims, always do your best to make the best and safest products and test them before they are distributed to the market. You should also make sure you list the side effects of your products and make consumers aware of what they are getting into by using your products. Here are the steps to take when handling product liability insurance claims:
How to Handle Product Liability Insurance Claims
1. Train your customer service representative on how to talk to, and handle complaints because they are your first line of defense. The way to respond to the customer and handle the complaint may make the difference between a simple product complaint and a full-blown law suit.
2. Record all complaints-: Ensure that every complaint lodged is recorded by the customer service representative and forwarded to the relevant department for action. You must train your customer service representative to always do this for every call that comes through to the company. You can easily get a data tracking software for this. You can forward such complaints to the quality assurance department or the legal department who would be in the best position to conduct investigations and take necessary actions immediately.
3. Record all conversation in verbatim-: You must also ensure that all discussions with the customer are on record word for word because the first account given by the customer of the incident is likely to be the most genuine one. There have been cases of customers who later changed accounts into something uglier after much calculation and scheming but if you have the first conversation on record, you would be able to protect yourself.
4. Try to resolve the complaint as soon as possible-: When a complaint comes in, you should make efforts to pacify the customer as soon as you can, failure to do so might result in an avoidable law suit.
5. Refrain from admitting guilt-: This is also very important and you may lose your product liability insurance if you do this. Never directly accept responsibility or make damaging admissions and train your customer service representatives to never do so.
6. Wait for a written complaint-: If you have tried all you can to resolve the situation and the customer still insists on getting compensation or suing your company, you should wait until you get a letter to that effect.
7. Check your insurance policy-: The next step is to check your product liability insurance policy to know what it covers for and what it doesn’t and to know if it would be applicable to the case at hand. You should also find out if the legal bills are within policy limits or not in case of a legal battle.
8. Forward the complaints to your insurance company-: If you are sure that the insurance policy you took is supposed to cover for the case at hand, then you must refrain from speaking directly to the customer but forward all questions, enquiries or complaints on that issue to the insurance company. The insurance company would most likely want to keep the case out of court and settle the customer because a legal battle might cost more.
9. The insurance company is supposed to issue a settlement at this point but in the event that they do not, you should get your own lawyer involved. Some insurance companies are ‘funny’ and wouldn’t want to pay the settlement and you may have to sue them to make them pay.
10. Recall bad products to avoid more product liability claims-: Your quality control company has to do a due diligence and conduct an investigation to determine what the problem is and then steps must be taken to prevent further occurrence.
11. Take steps to redeem the company’s image-: This is very important because customers are very sensitive. You may lose a lot of customers to a product liability case especially when it becomes a legal tussle therefore, you must take steps to regain your customer’s affection and trust maybe through promotions, giveaways and community projects.
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