Recalling a product from the high street costs a great deal of money. Sales figures fall, negative press blemishes your reputation and you lose important contracts. And, on top of that, your traditional civil liability insurance does not cover these costs.
A product recall insurance will provide cover for all the costs of such a recall. It even covers third party costs for recalling your product. A unique aspect of this cover is that it can also be extended to include your branches abroad.
The damage to your business is not limited to the cost of the recall. The insurance provides cover for, among other things:
- destruction and replacement costs (costs to replace recalled products with equivalent products);
- redistribution costs;
- loss of profits;
- rehabilitation costs (costs incurred restoring your company image among consumers and your suppliers, through marketing campaigns, etc.);
- extortion costs (ransom);
- fees for consultants and experts;
- analysis costs.
Suppose your company supplies minced beef to a company that makes bolognese sauce, which is then used on pizzas by yet another company. A consumer who buys one of these pizzas in a supermarket becomes ill. Following an investigation, the bolognese sauce is found to be contaminated, resulting in all of the pizzas being withdrawn from the shelves.
Your company is held liable, resulting in catastrophic consequences. If you take out a separate Contamination insurance, the civil liability rules (error, damage and causal link) are no longer applicable for receiving cover. A transgression of a public-health standard is sufficient to initiate a recall, irrespective of who or what was the cause of the damage.
Traditional civil liability insurance policies exclude certain diseases (such as listeria, salmonella, etc.). Contamination insurance, on the other hand, does ensure cover for these diseases.