Insurance Corner - What you need to know about Product Liability Insurance

If your company manufactures any kind of product, from lemonade to engines, computers to clothing, it could easily find itself on the wrong side of a lawsuit by a plaintiff claiming your product(s) caused some kind of injury or damage. In today's litigious society, it is not even necessary for you to be the manufacturer of the product. Sellers are often sued right along with the manufacturers.

It's only natural that people want to be safe from injury and property damage whether from food poisoning, getting into an auto accident due to tire failure, or having the foundation of their home crack, but how to protect your company from liability? The answer may be with product liability insurance.

Some liability claims are covered as part of your company's commercial general liability (CGL) policy. However, products that are particularly likely to lead to liability may be handled separately. As part of a sound risk management program, you should know well in advance how your current policy would respond to such claims.

The basic premise of most product liability lawsuits is that the product manufacturer or vendor failed to take appropriate steps to insure the product was safe. While it is impossible to eliminate all hazards in connection with many products, it is critically important to communicate with buyers and users of the product about such hazards. In the instance of a lawsuit, your best defense is to prove you took all reasonable measures to assure no one would be injured.

Research and testing prior to the release of a product, proper handling and storage of a product (food, for instance) to avoid contamination or damage before during and after processing, customer warnings and instructions for use will help to show that you were diligent in your effort to prevent injury or damage to the end users of your product.

Another way to reduce potential product liability claims is to have a consistent way to handle customer complaints. The procedure should be written to ensure that uniformity is followed while addressing the complaint and consistency of performance should be enforced.

Response should be made quickly. If resolution is not able to be made immediately, at minimum the customer should receive an acknowledgement of the complaint and a letter notifying them of the company's intention to respond.

If the company unable to resolve the issue immediately (refund, replacement, etc) the customer should be given regular reports as to the progress being made to resolve the matter. Customers want to feel that their injury is being taken seriously. Concern shown by the parties involved can greatly reduce the chance that a lawsuit will ultimately be filed.

For additional information on how to best protect yourself from a product liability lawsuit, contact Martha Marton at Tupling Insurance Brokers Limited. (705)458-8111 marthamarton@tuplinginsur ance.com.