Product recall’s high price tag for BMW

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Last week, BMW announced they are recalling over 45,000 7-series models for a door problem that can allow the door to open when the car is in motion.  The fact that such an obvious safety hazard triggered a recall is not surprising.  What is surprising is that the cars in question are actually older models from 2005 to 2008.  So, these models in their current form, may not even be in production anymore, since car models typically change year-to-year.  This raises an important point on product recall insurance — Just because you don’t make the product anymore, it doesn’t mean you don’t need product recall insurance for it.  Product recalls can carry huge price tags for companies in hard costs including:

  • Costs to repair or replace the recalled products
  • Communications
  • Transportation
  • Product disposal
  • Payroll expenses for overtime
  • Government-levied fines

A product liability policy covers the hard costs in the logistics of a recall including the costs to get back and replace the recalled products.  Keep in mind, just like with BMW, as long as the product is still in use, a recall could happen.  Keeping product recall insurance can help prevent an economic disaster for your company

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