When it is discovered that a product has a dangerous fault, it is necessary to recall the product so that it might be repaired or replaced. As the name suggests, product recall insurance is intended to cover the costs of recalling the product. The cost of repairing or replacing the product could also be covered by product guarantee insurance. Product recall, product guarantee and cover for financial losses stemming from the product failing to fulfil its intended function can often be covered as separate sections of the same policy.
A product recall situation can be a worrying prospect for any business, with the potential for not just financial loss, but significant damage to their brand and reputation. Cover can usually be tailored to the unique exposures of a wide range of industries for example food and drink production, non-food consumer products and vehicle parts but it’s not just manufacturers who are exposed to product recall risks.
Many companies who form part of a supply chain are at risk from it – including those involved in the storage and distribution of products. Product recalls then, can be extremely expensive and should be a growing concern for businesses of all sizes. No matter how positive their reputation, one breach of quality control can potentially change this overnight.
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