Product Recall Insurance
What Is Product Recall Insurance?
What Is A Product Recall?
Important Takeaways:
What Does Product Recall Coverage Cover?
- Product recall insurance may cover expenses if a business has to pull their product from store shelves or online retailers due to the potential safety risks to users.
- This type of coverage is not included in a general liability or product liability insurance plan. It is an optional coverage you can add onto a new or existing policy.
- Product recall lawsuits are on the rise as stricter consumer regulations are introduced.
Who Should Purchase Product Recall Coverage?
Manufacturers
Importers
Suppliers
Distributors
Wholesalers
Retailers
Why Is Product Recall Insurance Coverage Important?
Product recall insurance is an important coverage to have because it may help you lower or eliminate the cost to remove a product. Think of it like a product recall expense coverage—it might save your business thousands of dollars and keep you from going bankrupt.
Product Recall vs Product Liability
Product recall is the action of pulling a product from the market, whereas product liability is the risk you carry for the injuries or damages a product may cause.
Both deal with isolated incidents involving an interaction between an individual and the product, however product recall means the liability of a product could be unsafe for a large portion of users and needs to be removed.
Product recall insurance coverage is not included in product liability insurance, but can be added on to your plan as an optional additional policy.
Examples of Product Recall
Product defects:
Sometimes the design of a product may be faulty, leading to broken pieces that cause cuts or damage to someone’s property. Let’s say the handle on a teapot isn’t able to withstand the weight of the teapot full of liquid. If it breaks, sharp pieces could cut someone’s hand, or hot liquid could burn skin. It could also stain clothing or carpets.
Toxic or harmful ingredients:
If your product contains a toxic substance, and that substance is accidentally inhaled, ingested, or touches skin, a customer could sustain illnesses, rashes, chemical burns, or allergic reactions. Components such as batteries, cleaning products, and nutraceuticals run the risk of containing toxic or harmful chemicals and ingredients that need to be handled with care.
Bacterial contamination:
When it comes to making something like a beauty or food product, you run the risk of raw materials, ingredients, or water used in the production process becoming contaminated. This can lead to skin irritation, illnesses, allergic reactions, and more. For example, the meat used in frozen meals has been found to carry salmonella. Or, the water used to produce a facial mist tested positive for E. coli.
Manufacturing recall:
In some instances, a product may contain parts from another manufacturer. If an outside component of your product is recalled, such as a container, locking mechanism, or food ingredient, it can mean your product may need to be recalled as well until the problem can be resolved and your product is deemed safe to use.
Mislabeling or failure to provide warnings:
There are times when a product may be produced in the same building as another product, and cross contamination could occur. This could be dangerous for people with allergies. If you fail to provide a warning on your packaging, and they are injured as a result, you could be at fault. You also need to be sure you are accurately displaying all ingredients, instructions, and advertising materials on your product. False advertising or unclear instructions could lead to lawsuits and recalls until the matter is resolved.
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