Product Recall Insurance in Thailand

What is Product Recall Insurance?

A Product Recall Insurance Policy in Thailand will cover these heavy costs which are excluded from a Public or Product Liability Insurance policy. A product recall happens when a manufacturer becomes aware of a safety issue in their product and requests it to be returned from the consumer or removed from shelves. These costs can be debilitating to your balance sheet and risk your company’s viability. 

Once a manufacturer or distributor is aware of a real safety issue, such as the product already causing harm or is very likely to, or, allegations are being made by a member of the public, a process is set in place that heavily affects internal resources. The affected business must:

• Notify their product regulator immediately
• Notify the general public, including but not limited to, radio and television announcements and printed advertisements
• Notify customers
• Notify suppliers and other stakeholders
• Identify, trace, obtain and if necessary destroy the unsafe products
• Determine the cause of the problem and how long it has been there (which may require a site inspection or shutdown, internal or third-party testing, consulting experts, cleaning, fixing or replacing equipment and often independent verification by a regulator or other agency.)
• Rent additional warehouse or storage space to enable this to happen

All of this requires significant time and investment and for some businesses the product recall will be a real crisis. A recall event carefully must be managed carefully and quickly, to limit the impact to consumers as well as the manufacturer’s own business. A Product Recall Insurance policy from the right insurance company with the right protection is vital to the recall process and sustaining the policy holder while they juggle keeping the business operational in the face of intense public and regulatory scrutiny.

What Does Product Recall Insurance Policy Cover?

A Product Recall Insurance policy provides coverage for the financial losses associated with recalling and replacing a product due to contamination, defects, or other specified perils. This type of insurance is crucial for businesses involved in manufacturing, distributing, or selling products.

Here are the key coverages typically included in such a policy:

Product Recall Expenses – Covers the costs incurred in recalling and replacing a product. This can include expenses such as notification to customers, shipping, disposal, and other related costs.

Business Interruption – Compensates for the financial losses incurred during the temporary shutdown of operations or reduced production capacity resulting from a product recall or contamination event.

Product Rehabilitation – Covers the expenses associated with restoring the reputation of the product or brand after a recall. This can include advertising, public relations, and other efforts to rebuild consumer trust.

Third-Party Liability – Protects against legal claims from third parties, such as customers or distributors, who may have suffered harm or financial loss due to the recalled or contaminated product.

Contaminant Cleanup – Covers the costs of cleaning and decontaminating facilities, equipment, and inventory affected by a contamination event.

Government Recall – Provides coverage if a regulatory agency mandates a product recall. This is particularly relevant for industries where compliance with government regulations is crucial.

Business Reputation Coverage – Offers coverage for damage to the insured’s reputation resulting from a product recall or contamination event.

Extortion Costs – Covers expenses related to extortion threats or attempts to force a recall. This coverage may include payments to cease extortion threats.

It’s important to note that specific coverages can vary between policies, and businesses should carefully review and customize their Product Recall Insurance to align with their unique risks and needs. This type of insurance is particularly valuable for industries where the reputation of a brand is closely tied to consumer trust and where a product recall could have significant financial and reputational consequences.

Thailand Insurance Services will provide you with the right Product Recall Insurance from the leading insurance providers in Thailand for your business. We are the leading insurance broker in Thailand for Product Recall Insurance coverage.