Does My Business Really Need Product Recall Insurance?
Businesses across the world must live in constant fear of the words “product recall”.
Imagine investing all of your resources into that one killer product, only to learn that it doesn’t pass muster. A safety issue or a defect has been found that could potentially endanger your customers. You have no choice but to withdraw the product from sale. And then it’s back to the drawing board; yet another round of costly and time-consuming revisions and quality assurance processes.
Businesses dread product recalls because they start off expensive before getting significantly more expensive. Not only are businesses responsible for handling the recalled product, they’re also responsible for making any and all improvements and replacements.
And that’s the best case scenario. What if the issue isn’t caught in time? You’ll be held responsible for any unwanted consequences of using the recalled product. As well as a significant financial hit, your reputation will also take the sort of blow from which you may never recover.
So product recalls are a terrifying prospect, and that’s why your business needs product recall insurance.
What Does Product Recall Insurance Do?
Product recall insurance policies are designed to reimburse businesses for a variety of financial losses suffered through product recalls. The main benefit is that businesses are reimbursed for certain financial costs related to the incident even if the product recall results in no liability.
Product recall insurance is indispensable for any business that sells products commercially. In the past few decades, the risk of a product recall has increased substantially due to a greater number of stringent regulatory standards and product safety rules. And don’t get us wrong – this is great for the consumer – but it can make quality assurance a minefield.
It doesn’t help when more and more businesses are relying on global supply chains and disparate manufacturing protocols. No matter how stringent your quality assurance practices are, you can never eliminate human error completely. Mistakes will happen, and products just might make it to the market with all their health hazards intact.
Of course you’re doing everything you can to make your products as good as they can be. You might therefore think that you don’t need product recall insurance. But given how common product recalls are, think of your insurance policy as your vital safety net. It will mean that, should the unthinkable happen, your business will be able to continue relatively unscathed.
What Does Product Recall Insurance Cover?
Product recall insurance covers certain financial losses related to the insured event. These can include:
- The logistical costs associated with the physical recall of the product
- Loss of profit while the products are off the market
- Product replacement costs
- Rehabilitation expenses
The problem is that, even if you have adequate insurance, the product recall service won’t be a smooth ride. You’ll still be required to deal with a wealth of regulatory issues and to engage regularly with your insurers – all while trying to work out what went wrong on the first place.
This will be stressful to say the least. And how on Earth are you supposed to effectively manage your claim with so much on your plate?
There is a clear solution here: All you have to do is arrange for a team of experienced experts to manage the claim on your behalf.
How Can A Loss Assessor Help With Product Recall Claims?
It’s not enough to simply have product recall insurance. Should you ever need to make a claim, your insurers are unlikely to offer you any advice or guidance. This is likely to make the process even more stressful than it should be, and as a result, you may not receive everything you’re entitled to.
But in the event of a product recall claim, our specialist loss assessors will examine your policy and work on your behalf to prove that you’ve complied with all conditions. In this way, we’ll ensure that your insurers accept liability quickly, which will serve to speed up your business’s recovery.
At the same time, we’ll act as expert advisors to your crisis management team. We’ll attend all the critical meetings, and just generally represent you and your business concerns throughout the entire claims process.