INSURANCE AGENCY NETWORK Blog
There might be some instances where you purchased product recall insurance, but your situation needs product warranty insurance. It is crucial to distinguish the differences between the two, especially in terms of insurance coverage and liabilities. If you have large retailers on your business, they may demand a warranty on the products that you supply to them, where product insurance is a must for both parties.
Product Recall Insurance
This type of product insurance only covers reimbursement for expenditures in recalling the product from the market as long as it is under an insured event. If your products are hazardous and can cause bodily injury or property damage, it is a protocol to remove it in the market. Although manufacturers usually buy it, sellers, wholesalers, distributors, importers, and exporters can also get this insurance.
Triggers of the recall insurance policy include the recovery of stocks, recalling, and market withdrawal of the unsafe product. However, this insurance can cover advertisement, shipping fees, proper storage and disposal costs, labor, and consumer notification.
Product Warranty Insurance
Meanwhile, product warranty insurance is more passive than recall insurance. It only covers costs for repair, replacement, or refund of the defective product that did not meet the particular performance standards. It allows an insured way for manufacturers and sellers to extend the warranty offered by the buyer of the product. It is explicitly covering product operations and mechanical performance setbacks for the benefit of the manufacturers.
What are the Differences Between the Two?
Both of the insurances are essential in business, especially for large retailers that need assurance for the product’s warranty in case it fails to meet the specific standards. However, product warranty insurance only benefits the end-users, while the product recall mitigates liabilities for significant detriments caused by the defective products.
Product warranty also works well on innovative technology as it allows you to purchase a more extended warranty at a minimal cost. On the other hand, product recall provides coverage for products imposing an imminent threat to your buyers’ physical body or damages.
As a manufacturer, you must know well how immense the differences between the product recall insurance and product warranty insurance are. These two coverages are alternative ways to protect your hard-earned profits when inevitable product discarding occurs.
At Insurance Agency Network, we do our best in making sure that our clients are well-protected with affordable and comprehensive policies. We make sure to go the extra mile to help you with your needs. To learn more about how we can help you, please contact our agency at (425) 681-0996 or Click Here to request a free quote.