Home » How to Manage Product Failure Claims: Your First Steps
January 23, 2018

How to Manage Product Failure Claims: Your First Steps

How to Manage Product Failure Claims: Your First Steps

As a business, you strive to provide your customers with outstanding service. You make your prices affordable. You offer something new, unique, or otherwise desirable. When you hand it to the customer, you expect it to solve their problem. Sometimes, this does not happen. The product may fail to work. It may cause injury to the user. When this happens, your business insurance may offer some financial protection.

Product Liability Coverage

When a product causes loss to the customer, a component of your business insurance may help to pay for that loss. This is a component of your liability insurance. Product liability insurance can also be a rider or additional coverage. It extends your protection here. Your first step is to ensure you have adequate coverage. Speak to your insurer about the types of products you sell. Be sure to discuss the types of risks possible. Once it is in place, your next goal is to know what to do when an incident occurs.

When a Claim Occurs

Your customer calls you. The product you sold to that person did not work. It caused an injury to someone. Or, perhaps the product damaged their home. When you have an individual with a claim like this, you will need to document the details of the incident. Gather as much information about what happened and how it happened. Here are some other guidelines.

  • Whenever possible, get the item back from the customer. This is evidence. Your insurer will likely want to have this if possible. Your customer does not have to give it to you, though.
  • Gather the name and contact information from the individual. While you can make statements such as “I’m sorry this happened to you,” never say, “I’m sorry our product failed or did this to you.” Your goal is to avoid admitting guilt.
  • Gather all information about the incident. If possible, ask for the individual to stop by to provide you with more info.

Then, contact your business insurance agent. They will handle processing the claim. If the claim is not factual or has errors, the agent might help you fix them. However, other agents may not honor incorrect claims.

It is important to make sure your employees know this process as well. Your insurance is likely to pay for the damage if there is reason to believe it was due to an unavoidable and unpreventable product failure. And, your agent will provide you with feedback about what happened. They will help you determine how to file the right claim and make changes for the future. For more information on product liability coverage, our website can help you do your research.

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