Does your business need recall insurance? If your organization makes or distributes products, you face the risk of having a recall due to manufacturing errors or flaws in the items. Obviously, the costs can be an unexpected – and unbudgeted – burden.
Your firm will need to advertise the recall, arrange to pick up returned products, ship and store the unused items, and arrange to have them destroyed. In addition to these expenses, there may be added payroll due to overtime or hiring of temporary workers to handle the added workload.
Most basic business liability insurance policies will not cover recall costs. Recall insurance can soften the financial impact by reimbursing an organization for these unexpected costs. In many cases, recall coverage is available as a rider on an existing business liability policy. It can also be purchased as separate insurance policy.
Note that recall insurance does not cover liability due to injuries or illness caused by the faulty product. It also will not provide what is known as reputation repair. Another kind of policy, called crises insurance, can help your firm with reputation issues.
Cook, Disharoon & Greathouse provides insurance consulting and agent services to California businesses. We can help you determine if your organization would benefit from recall insurance. To learn more,
contact us.
