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How to protect your company against product liability claims

For companies that manufacture goods, creating a defective or dangerous product is a major concern. Business.com estimates about 34 million product-related injuries and deaths occur every year in the U.S. With the abundance of injuries, it is no wonder many businesses face product liability lawsuits. The results can be devastating for a company, with settlements costing millions of dollars.

You may be wondering what your company can do to prevent product liability claims. Here are four ways to protect your business.

Exhaustive Product Testing

When manufacturing goods, test these items at every stage of the production process. Start with the design of the prototype all the way through to quality assurance checks. An item should be tested on every step that moves it along toward the consumer. This will help prevent flaws in manufacturing, as well as design.

Evaluate your suppliers

If you use suppliers, make sure you trust the companies you work with. Ask them if they have done their due diligence to ensure the item they are giving you is designed safely and without flaw. You should also consider signing a contract that states any flaws in the products provided will be the financial responsibility of the supplier.

Include warnings on products

Your company may sell dangerous products. If you do, it is essential to put a warning label on your item. This notifies consumers that the product is dangerous, and it should protect your company from potential product liability claims.

Get product liability insurance

A business is not required to obtain product liability insurance. However, if a consumer brings a product liability suit, this insurance provides compensation to the injured person and may cover legal fees. All insurance is different though, so be sure to read the fine print and buy enough coverage for your company.

Your company’s best protection against a product liability lawsuit is to prevent it by rigorously testing your products, evaluating your suppliers and including warning labels on any dangerous products. If you are still concerned about your liability, consider purchasing product liability insurance to cover you in case of a lawsuit.

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