With the recent rash of high-profile recalls by automakers, many suppliers of components are debating whether it makes sense to purchase product recall insurance. Here are some questions suppliers should ask about this relatively new insurance product.
Do I need product recall insurance?
You should seriously consider this insurance if you manufacture or distribute the types of components that, if defective, could lead to product recalls by your customer. As a rough rule of thumb, if you think you need products liability insurance you also should consider buying product recall insurance.
What losses are commonly incurred when a component supplier is subject to a product recall? Can I insure against all of those losses?