PRODUCT RECALL INSURANCE
What is Product Recall Insurance?
A Product Recall is an act of removing a batch or production run of products from the marketplace.
Product recall insurance covers expenses associated with recalling a product. Product recall insurance is typically purchased by manufacturers such as food, beverage, toy, and electronics companies.
Product recall insurance reimburses policyholders for financial losses sustained when a product is recalled. Product recalls can be involuntary (required by a regulatory agency or the government) or voluntary (the manufacturer notices a defect that is unlikely to force an involuntary recall), and can be costly.
What is covered?
The insurance is to cover costs such as:
- Customer Notification– Informing each customer that has bought that product not to use the product and inform the company to be recalled.
- Shipping Costs: Transportation to get all the products back to the main manufacture.
- Warehouse and Storage expenses: the company may need to hire more storage to store the recalled products.
- Disposal Costs: to safely dispose of the product without causing any more harm when disposing of it.
- Over Time Work: where the company has to pay their employees overtime to solve the problem.
- Brand Repair: cost to help the business re-grow from the recall incident
What should you know?
A product recall can have long-lasting and costly consequences for your business, affecting reputation, productivity and employee morale. It is essential to avoid product recall by
- Understanding product safety standards and regulations within your industry.
- Assessing manufacturing process and safety.
- Performing regular quality checks
- Being prepared for the worst, having a plan and insurance to execute the plan if things go wrong.
Why Product Recall Insurance is Crucial in the Food Industry?
Every product comes with its risks, especially in the food industry. The food industry is creating millions of products daily. Therefore, various food product risks could be dangerous to the member of the public. Threats could include undeclared ingredients (allergies), untested ingredients or even material contamination (e.g. glass). Therefore, the food industry has to be extra careful when producing, packaging and distributing products. In addition, each product needs to clearly inform the user exactly what they are putting in their body. Although like any industry, mistakes happen and could harm the end consumers. Even the most minor mistakes can result [...]
Top 4 Insurances Needed To Cover Product Risks Claims
The goal of many companies is to provide a product that fills a market gap. Every day there [...]
Event Cancellations That May Affect the Hong Kong Rugby Sevens
It's that time of the year again - Time for the Cathay Pacific HSBC Hong Kong Rugby Sevens. [...]
Main Business Insurance for Clothing Brands in Hong Kong
There are millions of fashion, designer, clothing brands, some known worldwide and some locally recognised. Hong Kong fashion [...]