The Risks Of Product Liability for Businesses

In 2018, car manufacturer Toyota recalled 2.5 million of its Prius models after discovering a software glitch resulting in the cars stalling at high speeds. The company’s alleged failure to patch the software properly led to many lawsuits, including from one car dealer who received $15.8 million in damages.
From airplanes and cars to household appliances, most things we use daily rely on software, which makes bugs and software defects potentially disastrous for companies and the public. Designing and developing a product in today’s agile market is challenging in itself, but bugs and product defects can affect businesses of any size, and a product liability lawsuit could sink your business, even if it finds in your favor.

Product Software Liability Laws

Software is just like any other product you can buy. If an individual or business can prove that the software caused them harm in any way, they will likely be eligible to recover damages from those firms behind the production and distribution of the products. For someone to sue a software developer or tech firm for negligence, they must demonstrate that the software retailer owed a duty to provide functioning software, and the software did not live up to that standard. Alternatively, the user can show that harm came to them as a result of the software. Even if there is a license agreement or contract in place, it may not necessarily protect you from all types of claims.

How To Protect Your Business

Liability insurance protects your business in the event of a flaw with one of your products. General liability insurance is popular with small businesses to protect them against physical injury claims and property damage to a third party. It can also include coverage for product liability claims. Software product liability insurance ensures you have covered the cost of any lawsuits brought against you over software defects. Errors and omissions insurance protects businesses hired to deliver white-label or custom applications. It’s a good idea to get advice from product liability lawyers before deciding on which policy is right for you. Technology evolves rapidly, so professional legal advice will help you understand how your business could be held liable and what you can do to protect it.

Quality Control And Product Testing

The race to get a product to market as soon as possible can lead to product faults, recalls, and expensive lawsuits. Samsung hit the headlines for all the wrong reasons when its smartphones began exploding after purchase. Rigorous testing designed to try and ‘break’ the product or software before it gets into the public’s hands is the best way to avoid user dissatisfaction. Software and product testers have the job of risk mitigation, and insufficient testing or none at all increases the chance of product defects, issues for the developer, lousy consumer experiences, and in some cases, a potentially hazardous product.
A product liability lawsuit could be enough to finish your business. Even if it finds in your favor, the financial and reputational impacts could be devastating. Professional advice from a product liability lawyer combined with liability insurance and rigorous product testing will go a long way in protecting your business today and in the future.

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