I just read about Graco’s recall of six million car seats. It’s possible they’ll be subject to punitive damages because they may not have notified the National Highway Traffic Safety Administration within the required five days.
Punitive damages are an additional monetary judgement over and above normal compensatory damages. Punitive damages punish the business for reckless behavior. Graco’s potential punitive damages result from taking too much time to notify NHTSA and a baby dying in a defective car seat.
Please note that I am not advocating Product Recall Insurance. I am advocating a product recall plan and appointing a product recall coordinator. When it comes to product insurance and most start-up businesses, Product Liability Insurance is the top priority. Your customers often require proof of Product Liability Insurance to do business with you. However, they rarely consider Product Recall Insurance.
Clearly, you don’t want to make yourself insurance poor or pay so much in insurance premiums that your products are not competitively priced. However, at the very least, you should have a product recall plan in place in the event you find out you have defective products in the market.
Without a product recall plan in place, you’ll likely waste valuable time trying to get the proper notifications out. This may subject the business to added Product Liability claims and punitive damages. For help establishing a product recall plan, we suggest the Consumer Protection Safety Commission’s Product Recall Handbook as a guide.
We’re aware of the added cost of Product Recall Insurance to your business. But consider whether its too expensive to not have a product recall plan and a product recall coordinator in place.
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