5 Ways to Protect Your Business from Liability Claims

Insurance agent presentation and consultations with a lawyer or insurance agent. Law and insurance.

Whether you manufacture products or entertain clients in your office, your business is vulnerable to liability claims. There’s no surefire way to shield your business from lawsuits, but there are steps you can take the minimize the risk.

Here are five ways to protect your business from liability claims.

1. Engage in Thorough Product Testing

Product testing is an integral part of the production process and will alert you to potential problems with the product’s design or manufacture.

Inefficient product testing could result in failure to recall a faulty/dangerous product or manufacturer’s negligence.

A thorough product testing protocol will serve as evidence that your company takes reasonable steps to avoid product defects and create products with safety in mind. Ensure that your testing protocol includes documentation of the testing process. 

2. Get the Right Insurance

If your company produces products, product liability insurance can provide you with peace of mind and protection for your business.

Although this insurance is not mandatory, it is worth the expense. If you are sued for product liability, the policy will cover compensation awarded to the plaintiff as well as any legal fees you may accrue.

Shop around to find the right policy for your business. You may have unique needs that a standard policy will not cover. If this is the case, look for an insurer that can offer the specialized coverage you need.

3. Address Liability Concerns at Each Design Stage

Consider potential liability issues at every stage of the design process. Yes, it may be costly to consider alternative designs or implementing other safety-related components, but recalls and liability claims may be even more expensive.

There are three types of defects that can lead to product liability claims:

  • Manufacturing: A defect in the manufacturing process. This can affect a single item, or an entire batch of products.
  • Design: A design defect that renders the product inherently dangerous.
  • Marketing: Failure to provide adequate warnings on inherently dangerous products can lead to liability claims.

Addressing these issues during the design phase can help you avoid having to recall your product or change its design in the future.

4. Address Premises Liability Concerns

If clients or customers regularly enter your business, then you’ll need to consider premises liability concerns. Slippery floors, leaks, damaged walkways and other structural issues can lead to slips, falls and other injuries that you may be held liable for.

In some cases, you could be held liable for injuries that occur on the sidewalk outside of your business – even if the sidewalk is property of the city. In Chicago, 70% of personal injury lawsuits related to sidewalk injuries closed without the city taking responsibility for financial damages. Investing in repairs and measures to keep your sidewalks safe could save your business from costly battles in the future.

5. Provide Adequate Warnings

Provide users with adequate and effective warnings on your product’s labels. Vague or inappropriate warnings can leave your business vulnerable to claims.

While warning labels are crucial, they cannot make your company immune to injury claims. They serve as an additional shield, but they do not waive liability.