How to Prepare for a Possible Product Recall

Product recalls are inevitable, and being prepared is essential as a business owner. 

Food items, baby products, car parts, electronics, and almost any product you can think of have been recalled at some point in time. Recalls can be put in place due to illnesses, injuries, and death amongst consumers. As a business owner, you must be ready for the adverse outcomes one of your recalled products may bring.

The consequences of a recall affect not only you as a business owner but millions of consumers globally, and may also affect various manufacturers due to the number of components and products involved. Large companies might withstand the consequences of a recall; however, small businesses might not be so lucky. The financial loss and damage to a brand’s reputation caused by a recall can shut your business down. So what can you do to help you prepare for a possible product recall?

Plan ahead for a product recall

Having an immediate action plan to address the product recall is crucial. Within the plan, you can include inbound and outbound communications. 

1. Firstly, inform your employees about the recall, so they are well informed and aware when stories from the news break. 
2. Next, reach out to customers on all social media accounts so they hear the news from you first. Negative reviews and comments are expected; address them immediately and directly. Studies show that doing so creates brand loyalty. If you have product recall insurance, get in touch with your insurance professional. Your coverage will most likely offer strategic recall help. 
3. Lastly, you might want to set up a product recall team that helps with incoming recall calls. Have a site or line dedicated to inquiries and those impacted. 

Product Liability vs. Product Recall Insurance

The right insurance can help you with costs associated with product recalls. Product and product recall insurance is essential if your company designs, manufactures, sells, or even distributes consumer products. Product liability insurance can protect your company against any injury claims or property damages caused by the usage of your product. These claims include design, manufacturing defects, misleading labels, and illness. Product issues are often very difficult to foresee and even out of your control. 

Product recall insurance can protect your company against some of the costs associated with the product that may be in the hands of your consumers. The insurance will reimburse you for recalls and financial losses (can be involuntarily required by a government agency, voluntary by manufacturers or distributors to prevent imminent danger). Recalls are costly. Costs can stem from investigations, crisis communications, reimbursements, product corrections, retrieval, shipping, testing, and disposal. 

Product recalls can happen at an alarming rate, and business owners must be ready to meet them adequately. Having a plan and the right insurance can shield your business and reputation. 

Reach out to one of our insurance specialists about incorporating product recall and product liability insurance into your protection plan.