Businesses across the country and around the world manufacture and sell millions of products every day. Smart businesses know that these products, especially consumer products, are at risk of getting recalled. While your business does everything it can to prevent a product recall, it can still happen. Before a recall occurs and drains your business, follow our beginner’s guide to understanding recall insurance.
What Is Recall Insurance?
Recall insurance is “first party” coverage that reimburses your business for unexpected costs related to a product recall. For example, you may have to cover shipping costs for customers to return recalled products. Or hire a waste management company to dispose of these products. Where will this money come from? Ideally, it comes from your pocket, then your insurance provider will reimburse you. Most recall insurance policies won’t cover 100 percent of the recall costs, but they will cover some, which saves you money.
How Does Our Policy Compare to Other Insurance Options?
Recall insurance is different from the policies you probably already have for your business. Most businesses must have a general liability insurance policy. Which covers bodily injury, property damage, and personal injury such as slander. A product recall does not fall under any of these three categories.
Some businesses choose to invest in product liability insurance. This protects them if one of their products injures a person or damages property. However, this type of insurance will not help your business cover the costs of a product recall.
Which Businesses Need Recall Insurance?
Now that you understand what recall insurance is and how it differs from other policies. You must decide whether your business needs it. Any company that creates consumer products should have recall insurance. In fact, it’s imperative that manufacturers understand product recalls and recall insurance. Retailers should also understand product recalls and recall insurance. Even third parties should have recall protection in place.
You may think that your manufacturing facility or retailer is too good to need our policy, and many businesses have safeguards in place to prevent a recall from happening. However, government oversight is strong and recall statistics are high. While you can take many preventative measures against a recall, you should not assume that your business will never experience one. It’s better to be safe and purchase our policy ahead of time, instead of wishing you had financial help amid an unexpected recall.
How Does Recall Policy Help Your Business?
Our policy helps your business with the financial side of a recall. While the other liability policies mentioned above are still important for protecting your business, they will not help you cover the cost of a recall.
Even if your company is doing well financially and you think it can handle a recall, it’s strongly recommended that you purchase our policy. Recalls can cost millions of dollars, and coming back from a recall and showing consumers that you are still a trustworthy company can cost even more. Ultimately, you will save money by purchasing a recall policy to cover your business in the event a recall arises.
This beginner’s guide to understanding recall insurance will set your company up for financial success in the face of a recall. Now that you know the policy options available and how they benefit your company, you can invest in the best policies for your business.
