Michigan Business Insurance: Should You Get a Product Recall Policy?


There are many companies that issue product recalls at any time of the year, and some of the biggest corporations can have the most number of recalls because of the volume of their productions. Take, for instance, the incidents involving products for kids like toys and baby gear. Target, the toy manufacturer: Fisher-Price and the world’s largest car seat manufacturer Dorel Juvenile Group are the top three companies that issued the most product recalls over the last five years (source: CBS News/Kids in Danger). Hundreds of incidents and injuries arose from the unsafe or risky products they recalled.

Business Insurance get a product recall policy

Several other industries have numerous product recall issues and a few of them – like the automotive industry – can have the costliest incidents. Thousands of consumers can be affected, and millions of dollars can be on the line. One notable incident was that of Toyota’s recall of millions of cars globally, which was estimated to cost the car giant around $2 billion.

If you’re in the business of manufacturing or retailing, you may be facing the same challenges, or you might foresee similar risks. You may want to protect your company with a general Michigan business insurance policy, but this may  not be enough. You also want  to consider getting a product recall policy.

Why Are General Liability Insurances Not Enough?

General liability covers claims for bodily injuries that may be a result of your company’s products and services, but these insurance types generally exclude events when your products are recalled. In other words, your policy may not pay for expenses incurred when your products are contaminated or tampered with during manufacturing, handling or the selling process.

What Factors Make Product Recalls Expensive?

You are required by law to issue a recall when you receive safety complaints regarding your product, but you can also issue one if you spot problems during quality checks. Any authorized government agency can also recall your products when they receive complaints from consumers. The whole process can be expensive on your part because of the costs linked to notifying the customers, retrieving and testing the products, disposal or repairs and replacements, loss of sales and legal settlements.

How Should You Address Your Insurance Needs?

When you see a need for a product recall policy, it’s best to consult on specialists for business insurance in Michigan. An established insurance agency like Allied Insurance Managers, Inc. can assess your needs and recommend the products that would fit best into your risk management plan.


Which sellers have the most kids’ product recalls?, CBS News

The Most Expensive Product Recalls, Bloomberg Business

Product Recall Insurance, Investopedia

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Allied Insurance Managers's Bio

Headquartered in Rochester Hills, Mich., Allied Insurance Managers is one of the largest, privately-owned, independent insurance agencies in Michigan.