Product Recall

by Taylor Agency Staff on December 4, 2011

Product recalls can devastate a business if their effects are not covered by the company’s insurance. Losses include the costs of customer notification, shipping, additional maintenance and refunds of purchases. Additionally, there may be damage to your business’ reputation, or the recall may come during your prime sales period, thereby damaging your entire year’s profits. Even if you are not the producer of the recalled item, you could experience grievous losses, especially if you are a retailer whose mainstay is affected by a product recall.

Companies seeking coverage under their general liability insurance policy should be aware that—without special endorsement—costs associated with the recall of a product excluded are likely excluded.

Review your general liability policy for more information on its product recall exclusion. If your business’ success relies heavily on a certain item and is vulnerable to the adverse effects of a product recall, consult with us about the possibility of adding a product-recall endorsement.

Source: USA Today, Consumer Product Safety Commission –

Next post: