The whole area of product recall insurance, product guarantee and warranties can be an absolute minefield!
In this short blog I hope to summarise the main differences.
Product Recall Insurance – In order to make a claim there has to be an unintentional error that would result or has resulted in the insured product causing bodily injury or damage, if consumed or used as intended. Policy cover does differ between providers, but the basic premise is there must be an accidental production fault/contamination that will result in recall cost. Products liability insurance is likely to cover third party bodily injury claims but not the recall costs.
Product Guarantee Insurance – As above product recall insurance will only come into effect if the product being manufactured 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. Although product guarantee insurance can be purchased in isolation, this is not common. Some product recall policies can be extended to provide an element of product guarantee. For example, consider the cost implications if a food aimed at a specific religious belief having incorrect labelling!
A warranty – A warranty is a guarantee to repair or replace a product if it is faulty. Some conditions are likely to apply.
An extended warranty – Is normally an insurance policy that is purchased to extend the warranty provided by the manufacturers. This is more common in respect of consumer sales. e.g. TV’s, domestic appliances etc.
An Insurance back guarantee – These are often used where the product is guaranteed by the installer for a certain period of time – double glazing and conservatories are prime examples. If the contractor ceases to trade and therefore cannot meet their obligations under their guarantee a backup insurance is in place to protect the purchaser.
There are also various types of products that are specific to the construction sector, these can include latent defect cover, performance bonds and home builders guarantees.