What is product recall? Are you at risk?
Product recall – Wikipedia
- A product recall is a request form a manufacturer to return a product after the discovery of safety
issues or product defects that might endanger the consumer or put the maker/seller at risks of
Who may be at risk?
- Wholesale distributors
Yes, the manufacturer is usually held liable for injury resulting from defective products – any
seller can also be held responsible.
A wholesale distributor’s exposure to product liability risk is increased if the risk uses its own
packaging and labels.
- For example: If the distributor modifies and repackages instructions and warranties. Also, if the
risk installs, services, or does repair work for the product they can be brought into a liability
suit and held liable for injury resulting from the defect.
Two exposures exist during a product recall – First and Third-party exposure.
First party loss includes damage to a company’s reputation, loss of income, notification expenses,
costs to dispose of the products and other extra expenses.
Third-party loss covers your legal liability to pay damages as a result of the recall. These costs
may include the recall expense of the product as well as the cost to repair or replace the product.
This can also affect lost Revenues of Others as a result of the recall of the product and other
expenses to replace the product.
In addition to maintaining proper insurance, it is important to apply risk management techniques to
help reduce or eliminate the exposure of a recall.
If you would like further information or would like to discuss this important topic, please feel
free to contact Roseanne Gedman at 908-598-7853 or Roseanneg@slcinsure.com