Protecting Your Investment During Recalls
Manufacturers, retailers, distributors and wholesalers are increasingly aware of the serious risks associated with the recently expanded regulatory enforcement powers of the Consumer Product Safety Commission (CPSC) and the Food and Drug Administration (FDA). Consumer goods, including juvenile products, pharmaceuticals, medical devices and food, are now subject to much tighter recall regulations.
Given this tougher regulatory environment, many companies are creating a recall blueprint – a recall preparedness plan – to mitigate the risks associated with recalls. These recall preparedness plans help to ensure quick and efficient recall response and proper regulatory compliance by making sure ahead of time that a company’s internal processes and staff are ready for a recall and that their recall preparedness procedures are routinely tested and refined.
As part of that advance planning, more and more companies are taking a closer look at their liability insurance to make sure it covers not only the direct costs of recall execution, but also planning and preparation, expert logistical and communications assistance, and loss of revenue.
Many standard liability policies have a recall endorsement clause, but this endorsement usually does not include the broader coverage now available from many insurance brokers. An important element of a recall preparedness plan is the identification and implementation of a recall insurance program that will reimburse the company for all the direct and indirect expenses related to a major product recall.
