From vehicles to pharmaceuticals to food products to cannabis, what can business owners learn from mass media coverage of product recalls? For manufacturers of all types of consumer goods, they might serve as a wake-up call, or reminder, to the potential impact of a product recall event and a lesson in what should be done immediately to prepare for potential exposures. Faulty products cause thousands of deaths each year, causing countless illnesses and lawsuits.
The Canadian Food Inspection Agency (CFIA) and The Federal Government mandates hundreds of recalls each year, not including voluntary recalls, which are unrecorded. Costs from a product recall or contamination can easily climb into the millions. Long-term losses result not only from the expense of a recall, but may also come from falling sales due to poor consumer confidence, brand rehabilitation expenses and potential shareholder lawsuits.
Despite recall frequency and the potential for extraordinary costs, many companies don’t adequately plan, prepare and practice for – or buy product recall insurance to protect against – product recall events. In addition to proper product recall insurance coverages, careful planning is essential in managing the risk of a recall.
Product recall insurance for first-party losses caused by product tampering and contamination incidents are broadly labelled as product recall insurance. Product recall insurance policies help to cover the additional costs of a recall, including product loss, costs to withdraw the product from the market, product disposal, product testing, overtime wages, and crisis management — costs that can be devastating because they arise at a time when a company’s revenues are typically hardest hit.
There are several product recall insurance coverage forms, each designed to isolate some components of first-party product exposure. ALIGNED Insurance can ensure your product recall insurance policy provides indemnity for:
The product recall insurance marketplace is highly specialized. ALIGNED Insurance can help secure the coverage you need and collaborate with you to develop a product recall insurance program that meets your needs. Call 1-866-287-0448 to speak with an ALIGNED Insurance advocate or connect with us at www.alignedinsurance.com to learn more.