Are You Covered? Part II

In discussing the value of product liability insurance last week, I limited the topic mainly to domestic producers. Manufacturers of imported goods have different rules to live by. I wrote in the previous post,

“...if a manufacturer makes a product, that manufacturer may be liable for any incidental or consequential damage arising from the use or misuse of the product. In addition, every person along the chain of distribution of that product may be held liable as well.”

This liability extends only to the U.S. Border. American courts have no real power of enforcement against companies based overseas. The most severe penalty that can be levied is a ban on further imports from that company. A nuisance, to be sure, but easily circumvented by changing a company name, or filtering product through another company.

The truth is, foreign manufacturers have little incentive to provide protection to their distributors or customers in the current climate. The risk is being carried entirely by “every person along the chain of distribution of that product”, at least those who are in the U.S. That means that the American company that imports the products, the distributor that wholesales them to contractors, and contractors, (who are in the weakest position to hire a good lawyer), are left holding the bag in product liability cases involving imported products.

Sure, it may be possible to save a few bucks buying imported goods. You may even be able to pass them off as being as good as American products, in fact, they sometimes are. (Think Honda, or Toyota) But what happens when an import becomes a quality replacement for American made products? They end up being made here, and the manufacturer carries liability insurance on its goods. But if you are using imported parts in the course of doing business, consider the risk you take that at some point a failure may occur, and leave you to pick up the check.