Here’s what you need to know about protecting your small business with surety and fidelity bonds — which are the two main types of business bonds.
The right insurance protection can help mitigate the impact of some of those risks. Here’s key information about insurance coverage for the costs and process of a product recall:
- Businesses can purchase “product recall expense” insurance (separate from GL coverage). This is “first-party” insurance coverage, meaning it reimburses a firm for some of its own costs in recalling a product.
- Product recall expense coverage can reimburse a company for a range of expenses such as: employee overtime; contractors and temporary employees; packaging, transportation and storage expenses; inspections and testing; and disposal of products.
- Other covered expenses could include: costs to replace the product; a customer’s loss of profit from using the company’s product in its own product; and “good-faith advertising” to communicate with customers to try to regain their approval. These coverages vary by policy and insurance company.
- The policy limits of product recall insurance must suit the business’s needs, which can vary by industry classification and other factors. Industrial machinery and food manufacturing businesses, for example, can face high product recall costs.
- The “trigger” of the insurance is important so that a company has coverage whether the government mandates a recall or the firm decides on its own.