Nearly every manufacturing company will face a product liability claim at some point. Whether or not you’re found at fault, the financial burden of investigating and defending a claim can be significant. With careful planning and reliable product liability insurance, your business will be better equipped to respond, react, and recover.
Here are five strategies to help minimize risks and protect your customers, supply chain, and bottom line.
1. Consider Risk Transfer Programs
Manufacturing often involves multiple suppliers, which means you may not control the quality of every material or component. Reduce your liability for supplier negligence with these strategies:
- Hold Harmless Agreements: Define the liability of manufacturers, contractors, and suppliers to ensure each party is responsible for their own negligence.
- Certificate of Insurance Requirements: Confirm all parties have appropriate coverage to defend against claims.
- Best Practices for Imported Goods: Conduct due diligence on imported products or materials, as transferring liability may not be possible in these cases.
2. Implement Systems for Tracking Essential Records
Strict documentation policies help ensure regulatory compliance and provide a solid defense if needed. Maintain accessible records such as:
- Customer design specifications, product orders, and approvals
- Change orders with documented reasons
- Engineering drawings and manufacturing blueprints
- Quality control procedures and checkpoints
- Supplier and vendor contracts
These records are crucial in case of an investigation or legal defense.
3. Create a Crisis Response Plan
A well-prepared crisis response plan allows your organization to act swiftly in the event of a problem. Key elements include:
- Operational personnel documenting key evidence
- Executives managing crisis communications and brand reputation
- Collaboration with your commercial insurance carrier for resources and support
4. Monitor Customer Feedback
Customer feedback can act as an early warning system to prevent potential claims. For example, addressing a customer complaint about overheating components is far easier (and cheaper) than dealing with the aftermath of a fire caused by the issue.
5. Get Reliable Product Liability Insurance Coverage
Product liability insurance provides financial support and resources to navigate claims related to injuries, illnesses, or damages caused by your product or service.
At Swarts, Manning & Associates, we work across a broad range of industries to manage the risks of bringing a product or service to market. Contact us today for a complimentary consultation at (833) 878-2820.
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