Clarity at the intersection of product risk and insurance.

Hand warmers are supposed to warm your hands, not your insurance broker’s phone line.

Now imagine you are on the receiving end of a call like this one. You just received a call from the CPSC. A component part used in your finished consumer product is defective, and not in a minor way. It is the kind of defect that causes fire and burn hazards.

Several issues hit at once: losses, costs, and damages. By any other name, it is going to be costly, perhaps economically fatal.

No worries. You will simply push all damages and liability to the component manufacturer. Fatal flaw: the manufacturer is based in China and has several other customers using the same component. It’s toast! And even if it survives, you won’t recover a single yuan for the troubles you are about to incur.

Next comes notice to your customers: those incredibly large, nationwide retailers whose names start with W, T, or C. Given the status of your component manufacturer, you, and you alone, will face a tidal wave of recall cost demands from them within 20 to 30 days. Have the cash?

Your component part manufacturer is about to put YOUR business out of business. Unless, that is, you added product recall insurance (PRI) to your insurance portfolio. If so, you will have the financial ability to respond to your customers’ recall damages demands and keep the lights on.

What’s in your portfolio?

Everyone has a bad day.

When that bad day results in a manufacturing error, the entire company and the bottom line suffer a bad day, perhaps, a bad year.

Here, whether a machine was off spec or someone was not paying attention because of a personal matter, the company is going to suffer significant recall costs.

CPI/PRI can help a company with downstream customers and the resulting recall costs when a bad day hits.

What's in your insurance portfolio?

Your trusted product has been manufactured, shipped, and distributed. All is good as the end of the year quickly approaches.

Yikes, bad news from QA. The product failed quality testing, what now?

Well, first you get to tell the FDA - always fun stuff. After they put you on the regulatory naughty list, you get to prepare a celebratory note announcing the recall to distributors, retailers, and customers. I promise those who received your holiday gift will respond with one of their own - a guy named Scrooge, who is employed with each of your customers, will be seeking damages. His gift to you.

Next, you get to go to a meeting with the C-Suite and discuss the financial hit, which will make the year a red one. Just in time for the holidays!

If you have contaminated product insurance or product recall insurance (CPI/PRI), you would have been able to tell Scrooge that recall and business interruption costs are covered.

What's in your insurance portfolio?

What happens when YOUR co-manufacturer has to recall YOUR branded product?

YOUR brand is now under regulatory supervision as YOU conduct the recall of YOUR branded product. YOU bear the initial recall costs: retrieving product, notifying customers, refunds, destruction, lost sales, and replacement inventory – have the cash?

Yes, your co-man contract may have an indemnification clause. The fatal flaw – your indemnity is only as good as the co-man's balance sheet and its insurance!!!

Here, the co-man's mistake involved six other customers. Will it survive to indemnify you?

Do you have product contamination insurance or product recall insurance (CPI/PRI)? Does your co-man or supply contract require CPI/PRI? When you vetted your co-man, did you require CPI/PRI?

What’s in your insurance portfolio?

What’s in your co-man’s insurance portfolio?