Business protection is one kind of insurance contract. As a general rule of thumb, people are allowed to make mistakes, even expected to: businesses, however, cannot. The primary reason for this is that when companies mess up, putting out a defective product or marketing it incorrectly, it affects a broader swath of people in various negative ways. When consumers purchase a product, they expect it to deliver on the core promises made by the manufacturer and the parent company: namely, that the product is safe, works well, and addresses the issue it was marketed to address.
Unfortunately, the sad reality is that no business can hold up to those expectations perfectly. The people who make up the cogs of your corporation’s machine are flawed, and they will occasionally produce work that doesn’t hold up to corporate (or even federal) standards. Fortunately, aside from purchasing liability insurance, there are ways to ensure you don’t release defective products that harm your consumer base or incur liability for your company. Here are a few ways you can safeguard your business from liability lawsuits and ensure that your products leave customers happy and healthy.
Table of Contents
1. Test, Test, TEST Your Products
Remember, all that is needed to file a liability lawsuit is this: the consumer bought the product, used it reasonably, and was hurt in the process. In that spirit, you should test your product from every foreseeable angle: test it as it’s meant to be used, but also try it as customers may use it to make sure that customers cannot file a reasonable claim against you. To an extent, there’s no protecting customers from themselves: one of them may come up with a way to harm themselves with your product that you had no way of predicting, but in those cases you’re functionally in the clear (like the customers who drank gasoline at gas stations: nobody held the gas stations liable). Testing your product in reasonable fashions, and issuing warnings for methods of use that may cause harm, will ensure you aren’t held liable in those unusual circumstances.
2. Keep Extensive Records, and Ensure the Product Was Designed to Be Used Safely
There has to be a consideration for safety when designing a product, which is relatively fundamental: what might be less so is the notion of keeping extensive records of the design process and demonstrating how your product is compliant with corporate and federal safety standards. Make sure your quality control process is similarly documented, as you’ll want to have these receipts ready when a customer comes knocking on your door with a liability claim. Everything you do during the design process should be documented and stored safely, as you’ll want to be able to prove that you went by the book, should you have to go to court.
3. Watch Your Suppliers and Transfer Risk Where Possible
Establish processes to review products coming in from third-party manufacturers, and consider spot-checking imports from these suppliers to ensure that they are up to code. When signing with a supplier, you’ll want to make sure to transfer liability as much as possible to that supplier: that way, if you should miss something while quality checking their product, you are not held responsible in a court of law.
Even the most stringent, thorough processes have holes in them, and your company can’t be expected to quality check every imported product from a supplier. Establishing these kinds of agreements from the get-go will ensure that they hold the responsibility for defects in their products, and if you miss something, you won’t be held responsible for a mistake that should have been corrected out-of-house.
Business Protection: Ensure Your Company’s Security
It can be difficult to avoid mistakes that incur liability even for the most upstanding, by-the-numbers companies and manufacturers. The certainty of human error requires an extensive number of safeguards built into all of your quality checking processes if you want to avoid lawsuits and a negative reputation among consumers. But if you follow these suggestions, letting caution be your guide and double and triple-checking every facet of your manufacturing and marketing processes, you will find your company sitting on a solid foundation when liability claims come knocking on your door.
Remember, slow and steady wins the race.
