The Importance of Recall Insurance
01-22-2010
By Howard Aughinbaugh
Recall insurance is on the collective mind of companies and corporate management these days. In 2009, companies asked me more than at any time in the past, “Can you get insurance for recalls?”
I met with a number of retail and wholesale insurance brokers last week and their experience and feedback is the same. There is a growing appetite in the commercial market for recall insurance coverage as part of recall preparedness and recall strategy.
That appetite has been fueled by the increasing sensitivity to the risks associated with recall management and recall logistics. That sensitivity has been heightened due to unprecedented recall activity, greater consumer advocacy efforts, recent legislation granting greater regulatory authority and increased recall standards, increased enforcement activity by the regulatory agencies themselves, a very active plaintiff’s bar and a new Administration focused on product safety.
While the answer is yes, companies can purchase recall insurance, the limits, premiums and coverage offered by insurance brokers vary greatly from the carriers who do provide such coverage.
This is really not a hard decision – learn what you need to do to qualify for coverage. A company’s chance of being involved in a recall is greater than ever. With more goods in the market, there is increased proportional risk that products will be recalled.
Keep in mind, carriers will want to make sure that they limit their own exposure and are making sound underwriting decisions when providing coverage. Therefore, if you want insurance you will need to provide a solid product recall plan demonstrating how your company will respond in the event of a product recall.
A product recall is just as serious a peril as fire, flood, product liability or errors and omissions. Businesses would not even think about operating without having those insurance coverage parts in place – so product recall coverage should be on your agenda for risk mitigation.
Stericycle ExpertRECALL™ is the industry leader in recall logistics and regulatory compliance for consumer product, pharmaceutical, medical device, juvenile product, and food and beverage recalls. ExpertRECALL’s professionals are experts in recall management who can help you streamline the entire product recall process.
[...] When it comes to risk management, there are many steps consumers and companies alike can take to protect themselves. We often overlook the role insurance plays in matters of product safety. The recent Toyota recalls are another reminder of how important it can be to have the right coverage. In this particular situation, three types of insurance coverage play a role: car insurance, product liability insurance, and recall insurance. [...]