As an insurance agency, we don’t have to deal with product recall because our products are not concrete, they are not consumed nor do they have components which could cause bodily harm.
We are an exception.
Mistakes inevitably occur, and while most large organizations purchase product recall insurance, many others do not. Because of current developments, and the benefit that product recall insurance gives to the insured, a decision not to purchase it can have big consequences
How important is product recall insurance?
Simply put, many companies can be forced into bankruptcy because they did not have product recall coverage. Most companies and organizations cannot take in the related financial loss.
Product recall events happen almost every day.
Hardly ever does a day pass without hearing of a company’s goods being recalled for safety or illness reasons. The Food and Drug Administration (FDA) alone recalled 9,469 products in 4,075 separate product recall events in 2012, the highest total in history.
2014’s numbers were only slightly lower.
Types of product recall insurance:
- Consumable products; such as food, beverages or pharmaceuticals where coverage could be triggered by an accidental contamination
- Consumer goods; such as finished household products where coverage could be triggered by knowledge the product is defective
- Component parts; non-consumable merchandise where coverage could be triggered by bodily injury, property damage or imminent danger of injury or damage
Product recall insurance reimburses the insured for certain financial losses produced by the recall event. Expenses covered include:
- Actual physical recall expenses
- Loss of profit
- Product replacement costs
- Business interruption & extra expenses
- Crisis Management/Public Relation
Thinking you might need to consider product recall insurance? Contact an agent today at 334.263.5535!
