Product Recall

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					Business Product Recall Insurance
                                                                                                   . . . that your company
                                                                                                   manufactures flexible piping
                                                                                                   that is sold to another company
                                                                                                   and used in closed tractor cab heaters.

Let’s say ...
                                                                                                   Suppose that a large batch of piping
                                                                                                   turns out to be defective and has to be
                                                                                                   in the heaters. That little problem
                                                                                                   will only cost you ...


                                                                                                   How is it possible
                                                                                                   that something as
                                                                                                   simple as a faulty
                                                                                                   ring pull would cost

                                                                                                   to recall and make right?

                                                                                                   Or, what if it turned out
                                                                                                   that there was a faulty
                                                                                                   component in the
                                                                                                   automatic gearbox you
                                                                                                   manufactured and
                                                                                                   transmission failures resulted?

                                                                                                   Price tag: a mere


These are just a few examples of actual cases – and actual costs – where companies would           And who would imagine that
have taken a serious hit to their bottom line without the right type of insurance coverage.        a few bits of glass that made
     In a perfect world there would be no mistakes, certainly not by a company which is            their way into bottled soft drinks
committed to quality in every aspect of its operations. But unfortunately, in the world in which   would necessitate a recall that would
we live, mistakes happen and accidents do occur, all of which can result in serious financial
consequences if the proper steps have not been taken to protect corporate assets.
     The companies concerned were protected from serious financial consequences
arising from incidents of this type because they had the benefit of this type of insurance.

The good news for these
companies is that they
have Willis as their broker
                                                      Because they knew about product recall, product
                                                      guarantee, and financial loss insurance and Willis
                                                      has a first rate market to go to for coverage.
                                                      The volume of business which we place makes
                                                      Willis the largest market facility handling this class
                                                      of business – and we have created a dedicated unit
                                                      so we can provide a better and more focused service.
                                                      Our professionals have the greatest depth of experience in
                                                      this specialised area to be found in the broker
                                                      market and the underwriters subscribing to our
                                                      facilities comprise a panel whose experience in
                                                      this class of insurance is unsurpassed.
                                                         If you are a manufacturer, producer, supplier, distributor,
                                                      processor, or assembler of products or component parts
                                                      you should know about these coverages and how they
                                                      can protect your company. Manufacturers’ requirements
                                                      and concerns vary as much as the products they make and
                                                      the Willis facility works to tailor the cover so that it best
                                                      meets the particular needs of each individual client.

What are the main issues and why is this type of coverage important?
– Statute Law and Litigation
  Statutory provisions concerning product safety are now widespread and comprehensive in scope.
  The increased incidence of litigation is of increasing concern to companies.

– Public Accountability
  Companies are exposed to a developing sense of public accountability in their recall decision making process.
What are the benefits of ...
Product Recall Coverage?                                                                What type of products are covered?
This provides reimbursement of expenses incurred by the Insured                         Most products can be considered. Some examples are:
including the costs of correspondence, newspaper and magazine
advertising, radio or television announcements, and transportation costs                –   aluminium products
for the return of the products because their use may cause the Insured                  –   automotive components
to incur a legal liability for third party bodily injury or property damage.            –   bearings
Also covered are the costs of examination and where necessary,                          –   beverage dispensers
replacement of the product arising out of a recall.                                     –   bottle closures
                                                                                        –   building components
Product Guarantee Coverage?                                                             –   child safety products
Included in this coverage are the costs of removal, recovery, repair,                   –   electrical products
alteration, treatment or replacement of products which fail to perform                  –   furniture
the function for which they were manufactured, designed, sold, supplied,
installed, repaired, altered, treated, dispatched or delivered
                                                                                        This cover is not designed for risks such as pharmaceuticals,
by or on behalf of the Insured.
                                                                                        computer software equipment and off-shore risks.
This section is not dependant upon a recall campaign.                                   Contractors and other companies whose activities are
                                                                                        mainly ’on site’ also present special problems.

Financial Loss Coverage?
This pertains to financial loss which is incurred by buyers or
third parties as a result of the failure of the products to perform
their intended function, including third party recall costs.

Our standard policy provides combined cover for Product Recall, Product Guarantee and Financial Loss Liability.

What indemnity limits are available?                                                    How Do I Get a Quotation?
Today, our clients purchase limits ranging from £250,000 to                             A completed proposal form is required before a firm quotation can
£25,000,000. The availability of further capacity is an evolving                        be provided but a non-binding indication can be obtained with the
feature in this specialised class of insurance and will undoubtedly                     following details:
lead to coverages being arranged with higher indemnity limits.                          – company name, location, and business description
                                                                                        – a list of products and percentage of sales/turnover including exports
                                                                                        – previous claims experience

The cover is based on a “claims made” wording, is renewable on an annual basis, and is normally fully retroactive in respect of the Insured’s products sold prior
to inception provided, of course, that the proposal information has been adequately presented to cater for past activities if these differed from present ones.
 of Product
If there is a product failure, what consequences
must be dealt with by the supplier? Contractually the
supplier could be responsible for replacement of any
products which prove to be defective in service, plus the
consequential losses incurred by the buyer which arise
directly from such failure.
   Should the size of the failure and the number of
claims grow beyond normal warranty expectations, the
supplier’s profit margin would begin to erode, possibly
impacting on the profitability of the business overall. In
the extreme, when the defect is safety-related, a recall
may become necessary, initiated either by the buyer or
the supplier, or by the two working together.
   It is at this point that the supplier’s exposure can
escalate dramatically, as recall campaign costs can far
outstrip the cost of the defective products and the
resultant claim can be substantial. Good communications
are essential – and often expensive – if the recall
campaign is to proceed quickly and effectively. Crucial
elements of a well-run campaign include the timing and
type of notice given to the end-user of the products,
with warnings appropriate to the particular problem;
clear identification of the products which are the subject
of the recall, and uncomplicated directions on the action
needed by the end-user in response to the notice.
One Camomile Street
London EC3A 7LA
Telephone: +44 (0)20 7975 2030
Fax: +44 (0)20 7975 2369


                                                                                                                                      Willis Limited
                                 Registered office Ten Trinity Square, London EC3P 3AX. Registered number 181116 England and Wales. A Lloyd’s broker

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