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Ignoring vital cover just won’t wash
The number of product recalls in Australia increased by 14% last year – and it isn’t just third-rate manufacturers to blame. Bigger brands are increasingly affected, including such brands as BMW, Samsung and Nanna’s Berries – proving you can never be sure where disaster might strike.
The Australian Competition and Consumer Commission (ACCC) figures show that the regulator negotiated or monitored 307 recalls last year, significantly up from 268 in 2013. And those incidents could be just the tip of the iceberg, with as many recalls again managed by specialist regulators.
Consumer group Choice says the trend, as well as the involvement of major brands, is alarming; “The latest recalls read like a script from a Hollywood horror film – exploding airbags, washing machines that burst into flames and garlic bread containing pieces of metal”.
More and more goods of all types are being imported, increasing the level of uncertainty. Certain business practices, such as quality assurance systems, can reduce the risk. But every business that sells, supplies or distributes goods should also have appropriate product liability and product recall insurance in place. This cover can protect business-owners that are liable to pay for third-party damages and will also minimise the impact on their finances and reputation. These policies can also cover businesses for compensation and the cost of legal proceedings.
Manufacturers, importers and retailers can all be taken to court by consumers suffering loss or damage due to defective goods. The court has the jurisdiction to if the item was defective, and if so what the level of compensation should be. Consumers have three years from the discovery of a defect to bring an action in front of the court.
The ACCC also has the power to bring a case on consumers’ behalf, usually when a defect has caused widespread problems.
Awards can run into millions of dollars and then on top of that, there’s the cost of identifying and replacing the defective items. The impact on your business’ reputation should also not be ignored, as these types of actions can be devastating.
With product recall insurance, recall costs are recoverable and some policies give advance payments. Customer notification, shipping and disposal, product replacement, business interruption, brand rehabilitation, and certain third-party expenses can all be covered. Policies can also be tailored to each client’s specific requirements to cover such things as product extortion and malicious tampering.
In a fast-changing world, there are already enough risks in business. Taking unnecessary chances just won’t cut it.
Talk to us to find the policy that suits your business needs and plan for a future without fear.