product guarantee insurance Sutcliffe & Co

When products go wrong!

Recently, there have been a number of well-known brands recalling their products for a variety of reasons:

  • Dorset Cereals recalling a batch of their muesli due to milling issues leaving some grains slightly larger than normal, so possibility of ‘discomfort’ when eating;
  • A batch of ‘Clear & Simple’ pregnancy tests producing some false positive results;
  • Mass, worldwide, recall of some Toyota hybrid vehicles due to a system fault that could cause them to lose power.

Duncan Sutcliffe, director, Sutcliffe & Co Insurance Brokers commented: “These clearly show that any issue can create the need for a company to recall some or all of their product. It doesn’t have to be life threatening, as in the case of a non-milled grain, and it may only affect a few batches of a product. Then at the other end of the spectrum we find millions of a costly product being recalled due to a potentially dangerous fault.

“Whatever the reason and whatever the size of your business, whether you have to recall a single or multiple products the costs don’t just stop with collecting the returned item. Advising customers and clients of the issue, destroying the product, replacing the product, refunding customers. Don’t forget the non-tangibles: loss of reputation and associated potential loss of business. It all adds up and can be very damaging to the bottom line.”

Duncan continued: “Where there is a potential for any risk to your business, however, there is also the insurance to support. Product recall insurance helps with all aspects of recalling a product that is of risk to health from basic costs of recall, destruction and replacing/refunding but also PR and brand rehabilitation specialists. There is also product guarantee insurance, similar to product recall insurance, but covers recalls that might not be dangerous. We certainly recommend that if you manufacture a product, whether that goes direct to consumers or is a component part, then you consider insurance to help manage that risk.”

Duncan Sutcliffe
Director, Sutcliffe & Co - Worcester, Worcestershire