Upon my scouring the web for suitable examples of a product recall to enlighten all you manufacturing / distribution guys out there as to the financial devastation that a product recall may cause without adequate product recall insurance, I came across something which really shouldn’t have made me laugh… but did… immensely!
Back in 2009, there was a bit of a to do, whereby a distribution company in Ferndown, Dorset, felt the need to recall a £2.99 novelty cuddly toy, which upon touching in a certain place was supposed to start singing ‘Jingle Bells, Jingle Bells’. Sadly, the Chinese manufacturer had employed a gentleman to sing these words who had very little or no grasp of the English language, and furthermore could not pronounce certain sounds. These factors, added into the equation that the song was speeded up? Well…
The results were really quite wrong. I have managed to get a copy of the ditty which this squeaky little toy made and I’ll let you be the judge. In my mind, and clearly the company in Dorset which recalled the toy, the mouse is heard to say ‘Paedophile, paedophile’!
Hear the song here: http://www.youtube.com/watch?v=E8kX6Hn3ows
Oddly enough, the company is called ‘Humatt’, and I’m assuming that they wished that this was what the toy did, rather than ‘Singatt’!
Nevertheless, and back to serious things: Once embroiled in a product recall situation the costs, direct and indirect, to manufacturers, retailers or wholesalers can be enormous. Public/products liability will address the effects of injury or damage caused, but the impact may be much wider. Recovering stock, transport, overtime, repair or replacement and subsequent loss of reputation and profit can cause deep financial damage.
Typical cover for product recall insurance can consist of the following:
- Costs of the recall
- Costs of replacing the defective product
- Consultants’ and advisors’ costs
- Loss of gross profit
- Product extortion costs
- Defence costs
- Brand rehabilitation costs
- Third party recall and replacement costs
Remember, not all commercial combined insurance policies will automatically contain product recall insurance, so as I always maintain, ask your insurance adviser if you are unsure about anything at all. None are more specialised than the chaps here at Comparecrazy.com. The business insurance comparison site!
