More and more recalls mean more and more product liability claims. Even without recalls, for companies in the Automotive Industry product liability claims are a way of life. So, what do you do to prevent such claims? Knowing that they are inevitable, what do you do to make sure that their impact is minimized?
When thinking of product liability claims, companies should definitely consider an ounce of prevention being worth much more than a pound of cure. Avoiding such claims can lead protect your brand, increase corporate goodwill, reduce legal fees and reduce claim costs. Not only that, but companies certainly have an ethical obligation to try to reduce defects, which reduces failures, which reduces product liability claims. Moreover, employee morale always suffers when a company finds itself improved when a company is not constantly fighting claims.
The first step to reducing product liability claims (they can never be eliminated completely) is to have a corporate safety program. Have written policies that lead to a culture of safety at the company. Empower all employees to make safety a priority and report defects or problems. Set goals that are both measurable and attainable.
Policy in hand, culture of safety moving forward, establish a product safety committee. Involve people from every department and aspect of your company: engineering, safety, warranty, legal, accounting, sales, risk management, etc. Appoint a product safety manager to head the product safety committee. Have that person report directly to the company's executive team – not one department – and ensure that all parts of your company report either directly or indirectly to the product safety manager. Routinely audit your safety policies, procedures and warranty claims to spot weaknesses and failures before customers and consumers do so that you can preempt claims before they arise.
Lastly, when claims do happen, be proactive. Identify company experts and consider retaining independent experts. Immediately investigate the product at issue and any relevant scene where it allegedly failed. Preserve all the physical evidence – not just the product, but those related to it which might be involved. Preserve the key documents that are always important: design, quality control, manufacturing, warranty, etc. And, finally, make an honest initial assessment of the claim. If you cannot be honest within your own company, you are more likely to see one claim become many.
For more information on product liability claims, please join Jeffrey A. Soble for the webinar, Preempting and Mitigating Product Liability Claims on Thursday, November 6, 2014 from 1:00 p.m.-2:15 p.m. ET.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.