Manufacturers have a responsibility to ensure their products are safe in order to protect not only end users, but also themselves.
A product liability claim can be a big blow to a company, costing a lot of time and money in litigation and retribution. Taking the right steps from the very beginning of the design stages can help prevent product liability claims before they even happen.
Travelers has the following tips for companies looking to prevent product liability claims.
Transfer risk through management of suppliers.
Set up a risk transfer program. These programs help businesses avoid financial vulnerability to damages and claims due to liabilities caused or contributed to by others, says Travelers.
Effective risk transfer will prevent having to decide liability in court after an event occurs. Having these decisions legally predetermined in writing at the beginning of a business relationship will save the time and cost of litigation.
Have an attorney familiar with product liability draft any risk transfer agreements when you begin working with contractors, suppliers, etc. Travelers recommends hold harmless agreements to ensure contractors and suppliers are responsible for their own negligence and errors of omissions. Statements of financial responsibility – such as certificates of insurance – can also help a business avoid bearing financial responsibility for product-related claims by confirming that a contractor or supplier has the appropriate insurance.
Ensure safety standards of imported goods.
If your company imports goods, you may bear sole responsibility for ensuring the products are safe and meet industry standards and government regulations here in the U.S. When importing products, components, raw materials, and sub-assemblies that will be provided to an end user, it may be your responsibility to confirm the proper safety warnings, labels, and instructions are provided for that end user.
Travelers says importers should strive to gather pertinent information from suppliers that might be needed in light of these responsibilities and in the event of a subsequent claim.
Design risks out from the start.
Prevent a claim from ever happening by designing the risks and hazards out of your product right from the start. When products are in the design phase, conduct a safety review that takes into account how a product will be used and what kind of hazards might arise from its use.
As with imported products, products you design should comply with industry and government safety standards and should have the appropriate labels, warnings, and instructions understandably and prominently displayed and available for end users.
Post-design, regularly scheduled safety reviews should be performed to confirm that products still comply with the latest safety standards.
Keep essential records – you might need them later.
Establish documentation policies to prepare for the possibility of product liability claims. Establish a document retention policy to help ensure preservation of documents important to the investigation and defense of product liability claims.
Certain documents to keep records of include:
- Copies of customer design specifications and product orders, including customer signoff on final designs.
- Engineering change orders, to document any changes and provide clear and complete reasons for the change.
- Written procedures and instructions describing the flow of the product through the manufacturing process and quality control steps.
Enable and review customer feedback.
Review the complaints and feedback from customers to prevent serious incidents caused by products – this process can help prevent product recalls and the negative publicity and loss of goodwill that can accompany them.
Defective, faulty or misused products can cause serious injuries, property damage, and business interruption for customers. Hearing their feedback about a product early, and taking the necessary steps to improve a product early on, can minimize product issues and exposures.
Make it easy for customers to give feedback on products by calling into a customer service line or submitting reviews online.