Any manufacturer can be threatened by an economic downturn. In order to complete an evaluation of your business model you need to keep in mind that the changes you make in poor economic conditions can result in increasing your liability exposure.
Here are some of the key things to consider when looking at and adapting your model in uncertain times.
Factor in the Supply Chain
Almost every business will hinge on their relationships with partners and suppliers. It is important to carefully consider how these impact your exposure. You should never rely on their insurance to protect you against third party liability claims. They may be looking to cut costs leaving gaps in their insurance program.
Where you sit further up the supply chain there are potential exposures should a partner organisation face financial insolvency. You could be held liable for claims filed against such an organisation.
Ultimately, in order to protect yourself it is a wise long-term investment to expand your own insurance cover. It might seem like a good way to reduce your own costs but this can easily lead to having to having to pay out of pocket due to the shortcomings in your supply chain over which you have no control.
If you are involved in outsourcing or are considering this option, first talk to John Morgan Partnership about covering the associated risks.
Verify Your Contracts
In turbulent times it is more important than every to make sure that your contracts are in order to avoid potential litigation down the road. Your contracts should be clear and concise and should clearly outline the obligations of each party and put in place procedures for dealing with dispute resolution in case anything goes wrong.
We would never recommend rushing into signing a contract but in tough economic circumstances you must take the time to assess the risks associated with each contract and the potential legal ramifications.
Sometimes an economic crisis can be a catalyst for change. It can push you in directions you had not considered to exploit new customer bases or perhaps offer additional products or services. Either of these actions has the potential to revolutionise your business and help to keep you afloat but it can also expose you to additional liability.
Experimenting with new products and services is a steep learning curve. This can mean that it is more likely that you will face products liability claims.
To protect yourself you should look at expanding your existing cover or purchasing an additional policy. Your current insurance may only cover claims arising from one particular product as per the information originally presented to the underwriter.
Similarly, shifting or expanding your client base could result in an increased risk of unexpected legal actions. The same product or service may be received differently by a new audience and provoke distinct reactions in different sectors. It’s important to be covered for these potential liabilities resulting from any change in your business.
The best way to do this is ensure you work closely with your broker to keep them up to date so they can source the most cost effective and comprehensive solutions for your business.
Contact John Morgan Partnership on 01242 898387 today to be sure your plan for adapting the economic downturn does not go awry.