Product Recalls: Does Business Insurance Cover this Huge Risk?
Product recalls happen frequently and can be extremely costly to a business. In 2007, Mattel, the toy manufacturer whose most famous product is Barbie, had to recall 9 million toys because they may have contained excessive levels of lead paint. The cost for Mattel? $30 million.
In the United States, product recalls can happen in any industry, but are most common in the automotive, pharmaceutical, food and child product industries. Business owners should consider the cost of recalling the product, as well as the potential liability risks. What if a high chair has a faulty nut and bolt, and the chair collapses beneath the child, leading the parents to file a lawsuit?
It’s wise for any company who is selling products to the public to protect themselves with business insurance. Business insurance can cover the costs of a recall as well as legal costs and settlement if you are sued. Learn about the worst recalls in history, and what else business insurance may protect you from.