• 21
  • February
    2012

Consumers in Columbia, Missouri, should be wary of the products they purchase and where they come from. With the explosion of globalization in the manufacturing industry, components of many products are coming from far away countries where quality control may be less than ideal.

This leaves many American companies using these components vulnerable to product liability suits. Some may remember the recall of certain toys due to the use of lead-based paint during the manufacturing of the products. Any harm done by those products may have been on the American companies distributing them if they did not have insurance that covered the possibility of such an occurrence.

Many companies are getting this insurance now to prevent any serious losses stemming from lawsuits. If the outsourced supplier is not similarly insured, some American distributors and manufacturers are deciding to turn down any offers made by the foreign company.

In the past, this was not the case. Companies would hope that the foreign supplier was insured so that it would not have to eat the cost if something went wrong. Now, things are beginning to change.

On top of this, many organizations have begun using risk management policies and global consulting firms to ensure that these policies are obeyed. Translators and product specialists travel between countries to keep tabs on the components being made. Well-known companies, such as Honeywell International Inc. have adopted these procedures.

But it's important for victims of faulty products to know that any suits brought against companies will still have grounds if the company is found liable. The insurance protects a company against losses, but it does not prevent a consumer from bringing a lawsuit against a negligent manufacturer.

Source: Business Insurance, "U.S. manufacturers step up efforts to manage Chinese supplier risks," Louise Kertesz, Feb. 5, 2012