Let’s take a quick example question.
If Sofeast conducts a product inspection on a batch of our goods in China, passes them as reaching acceptable quality, and then upon arrival to us in the USA it’s found that there are unacceptable defects; does Sofeast bear liability for these defects and have insurance?
As a quality inspection agency, we have a cap on our liability in case there are clear signs of negligence in doing our work. Basically, that cap is not high, so it never makes sense to sue us. It’s the same for everybody in the industry.
The only circumstance in which this will change is if you book many thousands of inspections a year through a company like ours. If so, you can probably negotiate for a high liability and force the inspection agency to contract liability insurance. Below that level, no inspection agency will accept to be associated with “insurance”. In this business, we are paid to do a job, not to be responsible for some risks.
For very high-risk products where defects can put lives at risk, we suggest contracting insurance for your company or working with a manufacturer that has a liability insurance policy. Inspection companies can provide some extra assurance here, but not in the form of insurance.
Fundamentally, this is why it is so important to work with good manufacturers and to ensure they have solid systems & processes in order to reduce the risks of ever needing to litigate due to product defects causing dangers when in the field.
Here’s how we can help you reduce risks…
As you know, we conduct product inspections, but in order to reduce supply chain and product quality risks some key parts of our business are: