Product Guarantee insurance
What is product guarantee insurance?
Product Guarantee Insurance is there to cover the costs of dealing with a product that fails to meet the function or specification for which it was manufactured or supplied.
Product Guarantee Insurance is similar to product recall insurance, however, Product Recall Insurance will only come into effect if the product you manufacture or supply has a fault that is of danger to health. Product Guarantee Insurance will respond if there is a problem with the product, whether it is dangerous or not.
Product Guarantee Insurance is often purchased in conjunction with Product Liability Insurance, which covers cliams for injury or damage caused by the product. Product Guarantee Insurance extends the cover privided by Product Liability Insurance, as it will cover the manufacturer’s or supplier’s costs to recover and replace the faulty items, even if not hazardous or dangerous to health.
What types of costs would be covered by product guarantee insurance if a product fails?
- Removal
- Repair
- Treatment
- Recovery
- Alteration
- Replacement
What should my insurance cover?
Many policies can be extended to include a range of benefits such as:
Payment of fines & penalties
Payment of ransoms & extortion
Cover for lost or disrupted income
Cover for physical injury/damage
The cost of phone hacks
Cost of notifying your contacts
Incidents at your outsourced service providers
Social media risks
Product Guarantee Insurance is similar to Efficacy Insurance, which covers the failure of a product or service to perform its function. However, as with Products Liability Insurance, Efficacy Insurance would not give the comprehensive cover of recalling and replacing the faulty products given by product guarantee or product recall insurance.
The selection of Products Liability Insurance, Efficacy Insurance, Product Guarantee Insurance, and Product Recall Insurance can be determined by the nature of the product or service you are providing and what it is used for.
Other considerations can be contractual, as many supplier contracts will insist upon some of these insurances being in place.
A final consideration is cost, as Product Guarantee Insurance and Product Recall Insurance policies generally start at over £5,000 a year, which is normally prohibitive for smaller companies.
