Product recalls occur more often than you might think. They can be extremely expensive, very time consuming, and can do extensive damage to your business.
Therefore, if you are a manufacturer, it is important that you safeguard yourself from product recalls – and product recall insurance for manufacturers will do just that.
It is important to note that product recall insurance for manufacturers provides protection in the event any of your products pose an imminent threat of bodily injury or property damage to a third party. It does not provide coverage for defective or faulty products that don’t work and are not a threat.
As the name indicates, product recall insurance for manufacturers provides coverage for any costs that are associated with a product that is recalled from the market. For example, if a child’s toy is found to inflict harm on children, it may be recalled. This type of insurance would step in and provide coverage for any costs that would be associated with the recall of the product, such as legal fees, the cost of redesigning the product, and reputation management.
This type of insurance is commonly purchases by manufacturers in the food electronic, food and beverage, and electronics industry; however, manufacturers in any industry can benefit from product recall insurance. Generally, the coverage offered by this type of insurance only applies to the firm that purchases it; however, additional coverage can be bought to cover any costs that may apply to third parties.
There are a lot of costs associated with product recalls. These costs include collecting the items that have been recalled from consumers that have purchased them, disposing of the collected recalled products, potential lawsuits that consumers may file against the businesses that sold the unsafe items, and even crisis management to help protect or repair the reputation of the organization that sold the products that have been recalled.
As you can imagine, the costs that are associated with a recall can really add up. They can be damaging for large business, and for smaller organizations, they can lead to complete financial ruin. If you have a product recall insurance policy, however, you can protect yourself from the devastation that defective products can cause.
A lot of business owners are under the impression that they don’t need product recall insurance because they have a commercial general liability insurance policy. Don’t make that mistake.
While a commercial general liability insurance policy does cover third-party bodily injuries and damaged property that occur as a result of services you provide and products you offer, this type of policy does not cover the expenses that are associated with a product recall. That means that if a product you sell is recalled, your liability policy won’t offer you the financial protection that you need.
Though the exact coverage will vary from provider to provider, generally, a product recall insurance policy will cover costs that are associated with the following:
In more detail there are 2 parts of a product recall insurance for manufacturers policy:
Part One – First-Party Expense
Part Two – Third-Party Expense
There are two main types of product recalls that can happen:
Both involuntary and voluntary recalls can be covered by a product recall insurance policy. Therefore, whether are forced to recall a product that you have manufactured or you decide to recall it on your own, your product recall insurance can help to protect you from the damages that may arise.
Both large and small businesses that sell products to consumers should seriously consider carrying a product recall insurance policy. The United States Consumer Product Safety Commission’s list of product recalls is ever-growing.
There are several reasons why you should consider purchasing a product recall insurance policy. Here’s a look at some of the biggest reasons why manufacturers should consider investing in this type of insurance coverage:
In other words, if you are a manufacturer or products, considering the prohibitive costs that are associated with product recalls, the damage that they can do to your reputation, and how often they occur, it is certainly within your best interest to purchase product recall insurance.
The cost of coverage depends on a variety of factors, including:
All of these factors will impact the cost of your product recall insurance.
We hope this article on product recall insurance for manufacturers has been informative. To find out exactly how much coverage you need and how much it will cost you, contact an insurance broker that specializes in this type of insurance. Product recall insurance carriers, food product recall insurance, product recall insurance markets, product recall insurance policy wording, product recall coverage, product recall policy, product recall insurance cost and product contamination insurance.
