Adressing risks
If a single step in the production chain fails, it can quickly prove expensive. If the supplier is unable to deliver products, this will result in a partial or even complete production standstill as well as on lost earnings. The important thing is to analyse all critical processes – including those within your own company. This is the only way you can safeguard yourself optimally in the event of an outage.
Production downtime is not the only potential risk. Defective products frequently lead to claims. Professional liability insurance protects you regardless of whether the article being manufactured is a product component or end product.
Specifically, this means: If you deliver a defective product to your customer and this results in a claim, you are protected. The same also applies if your supplier delivers you a defective product, you fail to notice the defect and process the product further, subsequently causing damage to a third party.
We Recommend That You Take The Following Tips On Board
- Always make a record of the materials used, serial numbers, certificates, trial samples, etc. and keep these documents as evidence.
- Write down customers’ exact specifications and have product samples approved by them.
- Request confirmation of insurance from suppliers and customers once a year. It also makes sense to conclude identical liability agreements with suppliers and customers. (Example: If an agreement is reached with the customer to extend the warranty period to five years, this same five-year period should also be agreed with the supplier of the input materials).
- Any assumption of liability going beyond statutory requirements must always be discussed with the insurer. Unless specifically agreed otherwise, only your statutory liability is insured.
- Discuss matters such as quality control and product recall protocols with suppliers and customers. That will help to reduce claims and also ensure that recalls can be performed quickly.
