In 2007 there were 472 product recalls in the United States. Deaths, injury illness, loss of property are all some of the effects from a product recall. Not only are food items being recall there but so are many durable goods such as automobiles, appliances, and construction installs that are being recalled.
Besides suffering losses to the general public, losses from shareholder lawsuits, and the fines from the local state and federal governments; small businesses need to have the appropriate liability insurance in place to cover this unique type of exposure.
In addition to the obvious direct cost from product recalls there are many in direct cost. Some of those costs are listed below:
* the cost to take the product off the market
* the public-relations cost
* the cost of recalling the product and/or disposing of the product
* legal cost
* Government fines an added cost
* Defamation
* fighting liable and slander claims
* additional marketing costs to recover market share
* added increased government regulation and oversight
* Brand integrity
* employee communication
* crisis teams for rapid response
The typical commercial general liability policy can be endorsed for specific recall coverage to handle these exposures. All of the 12 points listed above can in some way or another be covered through the proper insurance portfolio. Almost all of these 12 points listed above are not automatically covered in the standard commercial general liability policy. Being insured with the proper carrier and having the proper coverages are tantamount to a small business surviving in these litigious times.
