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Home > Blog > How to Handle a Product Failure
MONDAY, JULY 15, 2019

How to Handle a Product Failure

hand writing on paper with a penMost companies work hard to ensure every product they put out onto the market is going to work properly. Yet, mistakes happen. Sometimes, your employee or the manufacturing process is to blame for the mistake. In other cases, the product failure occurs due to customer misuse. In all situations, you and your team need to know how to react to these failures so you can avoid them later. Here are some tips to help you.

General Liability or Product Liability – Which Do You Need?

The type of insurance you have is important.

  • General liability insurance often provides some level of product liability protection. It provides protection for losses related to bodily injury and property damage specifically. However, if your company produces products as a common component of the operation, standard general liability coverage may not be enough.
  • Product liability insurance – another form of liability insurance – tends to be a necessary addition. It enhances your coverage to provide for more risk coverage for product failures. Most companies need both if they sell products.

Gathering Information is Critical

In nearly all situations of product damage, the first step is to gather information. When a customer brings in a product and claims it did not work or failed for them, you need to learn as much as you can about the incident.

  • What happened?
  • What did the product do when used?
  • Did they follow the instructions you provided?
  • What injury or other loss did they suffer?
  • When did this happen?

This information is going to be important for you when you need to file a general liability insurance claim for the loss. During this conversation, do not admit any fault. Do not say your employee made a mistake or that your equipment was faulty. Rather, just gather information at this stage.

When possible, obtain the object back from the customer. This helps you to ensure you can file a claim with the insurance company. It also gives the insurer more information to use to make the determination of whether there is a claim of negligence.

How Your Business Insurance Handles the Situation

Once you work through this process, contact your business insurance agent to provide the information. They will then usually contact your customer and work with the customer directly to handle the claim.

Generally, you do not need to do anything else. The insurance company handles the claims process and pays the settlement as needed.

When you are facing a situation where you do not feel the claim is justified, be sure to let your agent know that. Provide any information that can support your claim of inaccuracies.

Also, keep in mind that any product failure is an opportunity to learn. If there is a mistake occurring, you can fix it. If the problem is large-scale, your general liability insurance can help to cover any losses others may have. Work with your business insurance agent to ensure all information is available to make the proper decision. Speak to your agent today to learn more about general liablity insurance.

Posted 7:01 PM

Tags: insurance, business failure, general liability
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