In business, liability is always one of the biggest concerns. As a business grows and expands, so too does its potential product liability issues. Of course, not all small business owners recognize the substantial risk product liabilities pose a burgeoning operation. If you are a small business owner who sells their own products, this is certainly something you need to learn about. We will cover various types of product liability risk your business could be up against in the post below. Then, use your newly acquired knowledge to minimize product liability risks for your business.
Problems In Product Design
Product design defects pose one of the biggest product liability risks to a small business such as yours. They are one of the most common reasons why startups fail. If a customer gets hurt by your product, they can sue you alleging defects in product design. As long as the customer can prove that a design flaw is the reason for their injury, your business will be held responsible. This could spell financial ruin for a small business owner like yourself. Be sure to do your business due diligence to prevent design defects from posing significant product liability risk to your company.
Another aspect of product liability risk is in the area of product marketing. If your marketing strategies and materials are not thorough and truthful, this could spell danger for your organization. Your small business marketing could be deemed defective if you do not provide adequate instructions for use. They could also prove defective if produce labels are mislabeled or do not sufficiently warn users of any potential dangers or side effects. These defective marketing claim, officially termed failure to warn, could ruin your business. Be sure to consider them when developing a product liability risk management plan for business.
Manufacturing defects can also pose significant product liability risk to a small business. This is particularly true for small business owners who outsource manufacturing. Your small business could be held responsible for anything that goes wrong during the product manufacturing process. As you learn more about the risks associated with manufacturing defects, there are a whole lot of variables to account for in those instances. Customers could file a lawsuit against your business if they are injured by the product. That is what makes this one of the worst types of business liability, particularly for small business owners with outsourced manufacturing operations. Remember this when developing your product liability management strategies.
Warranty breaches account for a considerable amount of the business liability risk that every small business owner takes on, second only to business cybersecurity liability. However, it is also one of the few types of business liability that you have some control over. Whatever product warranties your business offers, you need to stand by them. As long as you do, you will not have to worry about being accused of breach of warranty by customers. At least not the honest ones. Breaches of warranty are one of the most controllable aspects of product liability risk. Make sure you take control of the situation to protect your business.
Of course, there is also inherent risk when you offer product repairs to customers. Product services and repairs need to be done perfectly every single time. If not, your business is at risk of liability for repairs and service failures that could result in a lawsuit. Businesses could be held responsible for failing to deliver those services at all, or even just failing to deliver satisfactory results from those repairs. You want to keep this product liability risk in mind when determine whether or not to offer product servicing and repairs to existing customers. That will help you best protect your business from potential product liabilities.
All business owners want to protect their business from ruination. But few small business owners understand the gravity of the product liability risk their business is exposed to. If you are a small business owner, use this post as a resource to help you determine your business liability risk. Then, consider hiring an insurance consultant to help you prevent liability lawsuits for your business. That way, you can understand what type of business liability you are looking at and develop an effective liability management plan that protects your pride and joy. You will be able to rest easy knowing you did all you could to prevent product liability risks from becoming the downfall of your business.