It’s what keeps business leaders up at night. A harmful defect in just one product can threaten the health and safety of the general public and has the potential to bankrupt a company. Faulty products cause thousands of deaths each year, countless illnesses as well as costly lawsuits. Be it vehicle air bags, pharmaceuticals or food products, a defective component or product can quickly become headline news. If you are in the business of manufacturing any consumer goods, product recall insurance can help protect your organization for potential exposures.
In the event that your product is faulty, tampered with and/or contaminated, your loss may be protected with product recall insurance. Product recall coverages are designed to isolate a component of your organization’s first-party product exposure.
Revenue losses, the cost of withdrawing a product from market, disposal, testing, overtime wages as well as crisis management quickly add up. Despite the potential for extraordinary bottom-line costs, many organizations fail to prepare with adequate product recall coverage.
Revenue losses, the cost of withdrawing a product from market, disposal, testing, overtime wages as well as crisis management quickly add up. Despite the potential for extraordinary bottom-line costs, many organizations fail to prepare with adequate product recall coverage.
Product recall insurance indemnifies the insured for profits that would have been earned on the withdrawn products and also for profits that would have been earned on future product sales but which were not earned because of resultant future sales declines. This is usually limited to a specified time period.
Most product recall insurance policies will also indemnify the insured for necessary rehabilitation of the recalled product’s consumer image. The International Risk Management Institute (IRMI) notes that “this includes costs like extra advertising, extra expense to rush a new product to market and special promotions to rebuild public trust in the manufacturer and its products.” 1
Revenue losses, the cost of withdrawing a product from market, disposal, testing, overtime wages as well as crisis management quickly add up. Despite the potential for extraordinary bottom-line costs, many organizations fail to prepare with adequate product recall coverage.
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