Product Recall insurance covers the expenses which may be incurred by a company when they need to recall a product and replace it with a safe one. Additionally, Besso experts say that such polices may include advice and expert assistance during this process. Product recalls occur quite frequently, and bring with them a whole host of unwanted and hugely unflattering media attention for the company involved.
A product recall, if handled poorly, can have a catastrophic impact on the reputation of a brand, as well as its assets and in extreme cases, it ability to continue trading. Without this insurance coverage, a business that experiences this problem could very easily close down. This type of insurance, according to Besso, is intended for distributors, retailers, wholesalers and manufacturers of both whole products and their components.
Generally speaking, experts from Besso say that policies such as this will cover the costs of recalling a product which has been subject to contamination, has been deliberately tampered with by a third party, or has had a dangerous effect on those who purchased it. A comprehensive product recall policy should offer coverage of the expense of recalling the product, the replacement of that product, the profits lost, public relations as well as rehabilitation of the brand. A specified limit for these costs will usually be place.
Besso says that there are normally two parts to a policy such as this. The first part includes expenses incurred by the first party, and the second covers third party liability. Under the former, costs associated with the notification of customers, shipping, storage, disposal and the hiring of extra personnel to carry out the recall are covered.
Under the latter, damages which the third party sustained, which can be attributed to the product that has been recalled are covered. According to Besso, costs which the insurance company will cover under this section of the policy may include the recall expenses incurred by the third party, if their product incorporates the recalled item, and expenses associated with the interruption of business.