There is an insurmountable number of industries with a hand in manufacturing no end of components and consumer products. With this volume, some things can go awry during the manufacturing process, which can harm the consumer, and in turn, a company’s reputation. To avoid problems, manufacturers must ensure the safety of their products through rigorous testing and following guidelines set out by governments – like the Federal Trade Commission (FTC). Accidents caused by a manufacturer’s product can lead to a liability claim being made, which can affect the brand image. Luckily, there are reasonable measures you can put in place to make sure that you avoid this.
What is Product Liability?
Product liability is an area of law, on the responsibility of manufacturers, distributors, and suppliers. Being found to be negligent doesn’t come cheap, with an estimated figure of $12 billion being paid annually in the US alone.
Extremely High Standard of Product Testing
Testing products to an extremely rigorous standard is the most basic way in which manufacturers can avoid product liability claims. When businesses launch new products, the last thing they want to do is be negligent; by putting into place some simple steps, any faults can be ironed out before causing harm to consumers.
Some products are hazardous under certain circumstances, so it is important to ensure products have very clear warnings. An error in missing warnings can come with detrimental lawsuits and costs. For example, a cigarette company had to pay out $28 billion in damages, after a woman with lung cancer claimed they didn’t warn consumers about the risk of smoking. Even though this is something that you may consider common knowledge in this day, you need to be extremely pedantic in carrying out your risk assessments.
It’s highly unlikely that one manufacturer makes everything that they need to create their product. When you outsource for materials, ensure that you are using the highest quality goods. Once you have manufactured your end product, you need to run thorough testing – if a part fails that you didn’t personally make, you will still be viable. Make sure that third-party suppliers have a fault policy, and will replace or repair defective products.
Cover Your Back
So many small businesses have been brought to their knees by losing liability claims. It might be worthwhile taking out liability insurance that will cover the cost of potential lawsuits. Like with all insurance, you can’t just take it out for the distribution of any product; it will depend on how hazardous your product is deemed. Product liability insurance doesn’t come cheap, often costing up to $5 million for sufficient cover.
Manufacturing across all industries is vital for the world for function, but it does come with potential dangers that need to be accounted for. Ensure that you have a well-defined plan for how you are going to keep your company and brand image safe from the wrath of liability claims.