What your company does during the first days of a product recall determines its success or failure. If your company is not insured, a product recall can bankrupt you or adversely affect your business in the future.
About Product Recall Insurance
A single product recall could cost a company its profits and potentially put it out of business. Such cases are frequent, and they draw high media attention, which may have an adverse impact on public opinion about the product in question. Your company may incur significant costs associated not only with the recall and replacement of the product, but also with restoring consumer confidence in the product and its manufacturer.
The law states that manufacturers and sellers have a number of obligations including:
- Ensuring the safety of all the products they sell
- Notifying the appropriate regulatory agency within 10 days if a product does not comply with the technical regulations
- Taking measures to prevent harm to consumers, namely:
- Verifying that the information you provide or relay to others is accurate
- Developing a set of measures to prevent harm
- Recalling the product from the market (voluntary/forced)
- Compensating purchasers for damages related to the recalls
In the event of a recall, the owner of substandard and dangerous food products, materials and products must pay for:
- An expert examinatio
- Storage and transportation
- Disposal/destruction
Features and Benefits
AIG product recall insurance provides effective management of the risks associated with product recalls. This type of insurance covers the basic costs associated with product recalls as well as expert examinations by internationally renowned consulting companies in the field of crisis management and public relations activities, which help companies to manage their reputation and image in the very important period of the first weeks after a product recall.
The costs of product recall include (but are not limited to) the following:
- The cost of placing announcements in media outlets including newspapers, magazines, electronic media, radio and television, plus the cost of mailing out packages of materials for the recall of the insured product
- Necessary travel and living expenses directly related to the recall of the insured product
- The cost of hiring temporary employees solely for the purpose of helping to recall the insured product
- Overtime of staff employees to pay for work related solely to the recall of the insured product
- Necessary travel expenses related to the recall of the insured product
- The cost of renting additional warehouse space to store products being recalled or already recalled for a period not exceeding twelve (12) months
- The cost of delivering the insured products from any buyer, distributor or consumer to the place or places specified by the insured
- The cost of properly disposing of unused packaging materials and marketing materials at the point of sale in respect of any of the insured goods being recalled if such packaging or materials may not be used in the future
- The actual cost of destroying the insured product
Target market
Manufacturers and distributors of products in the following market sectors:
- Food
- Drinks
- Tobacco
- Cosmetics and perfumes