Manufacturers have production as their middle names. The goal of manufacturers is to create a product, using raw materials, that meets certain societal needs.
However, not every product will be perfect. In some cases, these products could even potentially harm a consumer. In this cases, the producer opens itself to huge insurance risks. To best protect its assets in the event of faulty products, many manufacturers issue recalls. In manufacturing, a recall is an official order by a company for consumers to return faulty products.
To protect themselves from damages related to recalls, many manufacturers carry recall insurance.
Why Recalls Happen
In many cases, manufacturers deal in mass production. Mass production means making a large quantity of goods. It doesn’t necessarily stipulate the amount of goods produced. Even a small business manufacturing homemade bread could be considered a mass producer.
Manufacturing almost always deals with a standardized processing procedure. Products don’t tend to vary. It is in this processing procedure that something might go wrong. Problems in mass production might lead to instances where the products you make are not fit for consumption.
For example, you may come to find out that the chains you use to manufacture a bicycle easily break. In these cases, a bike producer might issue a recall on the grounds that broken chains could cause bike accidents.
How Recall Insurance Can Help Your Business
Let’s continue with the example of bike chains. Under the recall, customers could return their chair to the consumer in exchange for a refund or other compensation. However, that might not be the end of the story.
The recall efforts might mean you have to spend substantial funds publicizing the problem, collecting the damaged goods and compensating affected consumers. Furthermore, in this instance, customers who experience a bike wreck might take legal action against your company.
Should a recall strike, recall insurance can help.
Recall insurance might help you cover:
- Advertising and publicizing the recall
- Costs of collecting products, including shipping
- Costs of replacement items
- Certain business interruption costs
- Public relations and crisis consulting
Recall insurance usually falls under a bigger umbrella of product liability insurance. Product liability insurance protects more than just recalls. It protects you, generally, from multiple risks associated with your products.
In the event that someone sues you for damages caused by a bad product, product liability insurance can help you cover legal fees. Talk to your agent to make sure your liability insurance includes recall coverage, and proper legal coverage.
We’ve got you covered. Buschbach Insurance can help you get a manufacturers policy that meets your needs in an affordable manner. Call us today at (708) 423-2350 for more information.