What Does Product Recall Insurance Mean?
Product recall insurance is a policy that allows a company to recover the financial loss from a product that is taken back from the consumer or seller or because of a defect or for safety reasons, like the possibility or causing injury or damage to property.
Insuranceopedia Explains Product Recall Insurance
Even with the safety standards and quality controls that regulate manufacturing, some commercial products still get recalled from the market because they turn out to pose a danger to consumers. Complaints about contaminated food or beverage, toys that can cause harm, or technological gadgets that become combustible have often reached the news, much to the woe of their manufacturers.
A product recall can not only be financially disastrous, but could also tarnish and ruin the brand name associated with it. Manufacturers, then, are encouraged to purchase this policy to protect them from the loss that happens when their products get recalled or banned in the market.
Product recall insurance also covers bodily injury or property damage experienced by a third party because of the defective product.