So you bought your business a Product liability insurance policy; that’s a step in the right direction but you still have to protect your business from product liability issues because, trust me, product liability cases are not always clean. They can be so messy sometimes that you would have to spend a lot cleaning up and redeeming your businesses’ image long after the case is settled.
Product liability can gulp a lot of company profits and even cause the company to go bankrupt. So, it’s just best to avoid them altogether. Here are some of proactive steps that you can take to reduce product liability which I have divided into three sections; one for the manufacturer, another for the distributor/seller, while the last one is a general tip for both classes of business.
How to Reduce Product Liability Claims in Nine Steps – for Manufacturers
1. Perform an honest risk assessment of your products to find out how they can put the users at risk and then take pro-active steps to reduce these risks or eliminate them completely.
2. Hire a design professional-: It is always best to hire experienced personnel who would help you design your products in such a way that they would be safe for users.
3. After the products have been designed, it is now your duty as the manufacturer to ensure that all products are manufactured according to the design without any faults whatsoever. You should manufacture products that are reasonably safe for the users.
4. Keep an eye on your competitor’s products to know how to improve your own products. You should also be very familiar with trends and happenings in your industry.
5. Source for your materials and components from good and reliable sources. Sometimes, damages don’t occur as a result of your own manufacturing process but as a result of using faulty parts in manufacturing your products and to curb this problem, you really have to avoid going for the cheapest material in the market rather, you should opt for the material with the best quality.
6. Comply with all design standards. Most industries have minimum design requirements and to protect yourself, you have to comply with these standards.
7. Ensure that the manufacturing process is closely monitored and that staffs are well trained on best practices. Standard quality control should also be in place so that the products can be thoroughly inspected and tested before it can be sold. Whenever any defect is noticed, ensure that it never gets out of your production facility until it is corrected.
8. Also, you should constantly look for ways to improve your products and document every improvement efforts you make. These might help to protect you in the event of a product liability suit.
9. Lastly, you should ensure that your product comes with a user manual which would contain proper instructions on how to use and how not to use the products and also have some safety warnings for the consumer. You may have to hire a safety professional to help you draft a safety warning document to include in your manual because a lot of manufacturers have been found guilty in product liability suits because the warnings they gave for their products were deemed to be inadequate. A safety professional would be able to determine just how much warning would be deemed as appropriate.
If you do all of this as a manufacturer, you would be able to significantly reduce product liability claims against your business.
How to Reduce Product Liability Claims in 3 Steps – for Distributors
As a distributor, you are the link between the manufacturer and the seller and sometimes you are the first in the line of contact when a customer wants to make a product liability claim. Some manufacturers even look for ways to shift the blame and burden of the liability claim to the distributor so you have to be adequately prepared to handle such cases if and when they come up. You can protect yourself by taking the following steps.
a. Always source your goods from reliable manufacturers who have credible reputations. Don’t try to cut costs by shooting yourself in the foot; that’s what happens when you patronize bad manufacturers because their products are cheaper.
b. Also, you should refrain from altering products or doing things that would affect the product. Keep your storage facility clean and ensure that any preservation method you use would not harm the products.
c. You should also perform thorough inspection and tests on all goods received from manufacturers before they are sold in the market.
4 Action Tips to Reduce Product Liability Claims Against your Business
i. Obtain a product liability insurance policy for your business whether you are a manufacturer, distributor or a retailer. This would help to cover all expenses related to product insurance liability claims and also prevent such cases from crippling your business and making you go bankrupt. If you have to fight out the case in court, the insurance company would bear the costs and if eventually you are asked to pay compensation, it is the insurance company to foot the bills.
ii. Stick to the terms of the insurance contract and follow all due procedures to avoid losing your insurance claims because insurance companies would always look for loopholes and ways to avoid paying claims especially when a huge sum of money is involved.
iii. Refrain from putting out advertisements that would mislead consumers of your products. You must ensure that the consumer is fully aware of the uses of the products. Don’t make bogus claims or promises because there are some people who look for loopholes like this to feed on with the hope that they would be able to make money from liability settlements.
iv. You should also have a standard product recall plan in place. Product recalls could be very costly and exhausting but if you have a solid plan in place, you may be able to significantly reduce costs associated with product recalls. You should also consider getting an insurance policy that would cover for product recall expenses and losses that may arise as a result of recalling your products.
- Can You Buy Alcohol With a Vertical License or Paper License? - July 2, 2021
- How Long Does It Take for an EIN to Become Active? - July 2, 2021
- How to Cancel My EIN Number? - July 2, 2021