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Blog: The Best Practices of Product Liability

By August 15, 2018 July 24th, 2019 Blog

The Best Practices of Product Liability

By Paul Mattes, Vice President of Sales at Sterling Insurance Group
As seen in Sterling Insurance Group’s Fall 2017 Risk & Business Magazine. Flip through the whole magazine online by clicking hereWant a copy mailed to you directly? Contact Sterling Insurance Group Marketing Manager, Joan Giffels: jgiffels@sterlingagency.com

 

Products often Fail

Products can, and often do, fail. That’s just a fact of the design world. What many businesses do not consider, however, is what happens to them (and their bottom line) when that occurs. Worse, many do not have a process in place to limit liabilities and deal with issues when they arise. When it comes to product safety, time is not on your side. The government requires quick analysis and reporting for any product-related incidents, meaning you need to be on top of it as soon as it occurs.

A good product safety risk management plan is going to include two key aspects: proactive risk prevention and reactive risk response.

Product Risk Prevention

Taking proactive steps before any potential incidents occur can help curb liability and protect you and your business. There are five key steps for proactive risk prevention:

  1. Know the rules: Understand the scope of the rules which apply to your product, which agency enforces them, and what that agency expects from you.
  2. Know your product: According to the law, you need to understand and anticipate product failures due not only to normal use, but also to consumer misuse and abuse.
  3. Warnings and instructions: Include reasonable instructions and warnings for potential hazards that show you have done due diligence when it comes to product safety.
  4. Controlling your supply chain: Suppliers should regularly be evaluated and audited to maintain standards in materials and supplies.
  5. Processes and procedures.

Reactive Risk Response

Once an issue has arisen, quick response is necessary:

Listen to your customers

Customers will readily tell you about problems with your product as long as they have a place to make their issues known within your organization. If they give feedback – listen! And ask plenty of questions.

Handle claims quickly and properly

Ensure a streamlined claims process. The faster claims can be resolved, the more reasonable damages will usually be.

Use product safety committees

Have a committee in place to regularly evaluate product issues, and take steps to alleviate them.

Develop recall procedures

Develop a flow chart of actions, actors and deliverables.

Understand your risk tolerance

Understand how much risk you are willing to take, what potential civil penalties could be and how much protection you have in place.

Audit and practice

Safety processes should be taught, practiced and measured. A core crisis management team should be put in place abd trial runs should be executed to everyone knows what to do and when to do it. How quickly can you recover a product from the field and test it?

 

Like many potential liabilities, the full consequences of a failing or failed product can’t easily be measured.

 

 

Want a copy of Sterling Insurance Group’s magazine mailed to you directly? Contact Sterling Insurance Group’s Director of Marketing, Joan Giffels:
-jgiffels@sterlingagency.com
-(586) 685-0137