A recent court ruling tragically highlights the risks that come with importing goods from overseas and onselling them in Australia.
Two years ago, a woman died after being electrocuted by a submersible pump installed in a backyard well at her Townsville home. The cause? The pump’s poor design and substandard quality; it didn’t meet Australian Standards. Manufactured in China, hundreds of these pumps had been imported and then resold by Pump Factory.
The company was charged under the Electrical Safety Act 2002 (Qld) with failing to ensure the pumps were electrically safe and exposing buyers to the risk of death or serious injury. Pump Factory’s sole director was also charged with failing to discharge his duty to exercise due diligence as a company director.
After pleading guilty to the offences, the company was fined $1 million and the company director $200,000.
At a lower cost, importing products from overseas can be a great way to grow your business. But the Pump Factory case serves as a stark reminder about the obligations that come with importation – and the potential fallout when something goes so tragically wrong.
Importers carry significant liability risks. As an importer, under the Trade Practices Act 1974 (Cth), you are deemed to be the manufacturer of the products you import. So if a product you import contributes to the injury or illness of someone using or consuming that product, you can be held legally responsible.
The buck stops with you. But there are steps you can take to minimise your risk of exposure.
When it comes to importing, end-to-end quality assurance is essential. You need to carry out regular reviews of product designs and production, and implement and review quality assurance procedures. Regular testing is also a must. Remember, the products you import must meet Australian Standards and comply with all relevant Australian legislation.
But navigating the compliance minefield is complex – as the Pump Factory case clearly demonstrates. The Victorian based company was not aware that the imported pumps in question didn’t comply with the relevant safety laws in Queensland.
To ensure you have a robust quality assurance program in place and comply with Australian Standards and legal requirements, you need access to advice and guidance from a professional who not only understands your business, but can also identify the wide range of legal requirements and potential risks your business may be exposed to.
Without it, your business may be in danger of ending up in the same position as Pump Factory.
But if the worst should happen, it’s important to have the right insurance coverage in place.
A specialist insurance broker can work with you to put together a tailored package that will meet the needs of your business and provide robust protection, including:
If a product you import causes injury or illness, you may be held legally responsible and the compensation to be paid can be substantial. A public liability policy is designed to protect your business from the costs associated with any legal action as a result of any negligence that causes third-party property damage or personal injury. It ensures your business has greater financial security for the future – allowing you to plan ahead with greater certainty.
There are hundreds of product recalls every year. Cars, food, appliances, sporting equipment, fashion, IT and more. No industry is immune and the penalties can be enormous. While larger companies may be able to absorb penalties, they can be catastrophic for smaller businesses. A product recall policy will protect your business from the significant financial and reputational costs associated with a product recall, including those related to withdrawing and replacing products, and managing your brand reputation.
Director and officers liability.
As a company director, you take on a significant level of responsibility. This leads to a significant degree of financial exposure if you’re found to be personally liable for any wrongdoing. A directors and officers liability policy is designed to provide you with protection against the risks of managing a business, and can empower you to make decisions for your business with the confidence knowing that your personal assets are protected.
Call Emjay to manage your risk
While a nightmare scenario like that experienced by Pump Factory is all to easy to imagine, don’t let it discourage you. Importing products can provide a pathway to long-term business growth and success. But you need to weigh up the potential risks.
At Emjay Insurance Brokers, we believe that risk isn’t a bad thing. After all, without risk, there’s no room to grow. Our team has a deep understanding of the risks your business may face when it comes to importing products from overseas. We’ll work closely with you to craft a suitable quality assurance program and tailored insurance solution that empowers you to embrace risk.
Contact us today to discuss your needs on (02) 9796 0400.