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Protection against business litigation after a product recall

On Behalf of | Feb 23, 2022 | Business Law |

The manufacturing industry does what it can to produce quality, safe products. However, the process is not always perfect.

It may become necessary to issue a recall if a defective or dangerous product gets released to consumers and inadvertently causes harm. This type of situation could make a company vulnerable to litigation regarding any injuries suffered because of the product.

There is a wide variety of incidents that could trigger a product recall. For instance:

  • Consumers could complain about product safety.
  • Testing or inspections could find a defect or danger.
  • An illness could arise that is traced back to a particular product.
  • Internal testing could identify a problem that requires the recall of a product.

Whatever the source, the company could be vulnerable to litigation from injured or ill consumers.

Recalls are dangerous for business owners. Not only do they open you up to litigation, they could also cost you a significant amount of money and ruin your company’s reputation. It is important to have a plan in place to handle these issues as quickly and efficiently as possible.

Insurance protections

An insurance policy could be part of that plan. Product-recall insurance can cover costs relating to the recall itself, since getting your product off the market will undoubtedly create additional expenses. Then there is the need to replace the lost inventory with new, fixed products. Some policies will even cover expenses incurred while improving a company’s reputation, which could take a hit during the recall. Finally, it may be possible to file a claim for lost income due to the need to recall a product.

Legal protections

In addition to product recall insurance, working with a business lawyer is another smart form of insurance for a company to have. A business lawyer can help you navigate the formation of your business as well as any major changes it undergoes – all the while taking steps to protect your company from litigation. This type of investment can have a huge payoff in the event that problems arise in your company.

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