Consider this: The insured is an import/export wholesaler who purchases products from around the world and sells these goods in Canada. One of these products includes Christmas decorations that are purchased from a foreign country and have the approved CSA standard sticker. The insured sells these products to a large supermarket chain in Canada where they’re used both as a display and sold to customers. The CSA stickers are later discovered to be fraudulent and the product poses a potential risk of catching fire. To reduce losses, a Canada-wide recall is announced, with the supermarket chain warning the insured to go to each individual location to collect all inventory of the supplied product themselves and cover all costs associated with the recall.
With increased media and social media visibility, news of a product recall can spread rapidly which can result in costly expenses as well as significant financial impact and reputational damage to a business’s brand.
Product Recall Expense Coverage is a must-have for any company that produces or supplies goods for consumer use and/or consumption. It covers expenses incurred should a company be required to recall unsafe products that have been distributed with the potential to cause bodily injury or property damage to ensure public safety and brand preservation.
Why is Product Recall Expense Coverage needed?
During manufacturing, products may develop defects or deficiencies that can cause bodily injury, sickness, disease or death when sold and distributed to customers. It can also lead to physical damage or destruction of property.
The risk of product recall is an increasing exposure many companies face as stricter global regulatory standards are created, product safety rules evolve and quality control guidelines become sterner in the interest of protecting consumers.
If these defects or deficiencies are detected earlier on, losses can be prevented and reduced significantly by recalling these products from the market. However, the cost associated with product recall can still have a significant financial impact on an operation.
Your underlying CGL policy excludes product recall specifically for your product making it key to include Unica’s Product Recall Expense Coverage as an additional supplement to your insurance coverage.
Unica’s Product Recall Expense Coverage Summary
This coverage provides protection for the insured for withdrawal, recall, inspection, repair, replacement, adjustment or disposal expenses that the insured incurs should they have to remove and/or replace goods or products they have supplied to others. The Product Recall coverage offers protection up to $100, 000 and covers expenses such as:
- Communications, including radio and television announcements, printed advertisements, telephone and other communications
- Cost of shipping the Insured’s goods or products to the place or places designated by the Insured
- Hiring additional persons
- Overtime pay for regular employees
- Reasonable and necessary costs incurred by employees, including transportation or accommodation; or
- Renting or hiring additional warehouse or storage space
To find out if you should add Product Recall Expense Coverage to your policy, talk to your broker about your coverage.
If you don’t have a policy with Unica but are interested in learning more about how to protect your business, find a broker to learn more about Unica’s Wholesalers Connection™.
