Many providers of water treatment may sell products they develop and use in the treatment of water. Our commercial casualty policy provides protection for the injury or harm these products may cause another or to another’s property.
About the Coverage
The additional loss exposure is how to recall the product before it causes injury or damage once it becomes known it is defective or needs to be withdrawn from further use. When this type of event occurs you may have the unsafe product distributed to many places. To notify and recall the product can be both time-consuming and expensive. This is not covered under the default policy, but you can add the coverage by endorsement for an additional premium. It is also not covered under standard commercial casualty policies, and normally the carrier will not add coverage back into the policy by endorsement. We use this approach because many insureds in the water industry do not sell products.
When you purchase our policy endorsement, we will pay—up to $100,000 or $300,000—the expenses you incur in recalling the product depending on which limit you purchase. Product withdrawal means the recall or withdrawal from the market or organization of your products because of known or suspected defects or tampering which has caused or reasonably could cause bodily injury or property damage. Expenses covered include extra expenses incurred for notification, materials used to notify, increased payroll costs incurred, costs of hiring independent contractors or other temporary employees, any transportation, packaging or shipping costs or charges that develop, increased warehouse or storage space expense and disposal costs.
How it Applies
Say you are a water treatment business that provides a water softening product that works well. You discover that one of the unforeseen side effects of the product is it eats away at pipe fittings over time and causes them to fail. You recognize it is your product that is causing this result. You remember that you have sold it to a number of customers over the years. You decide to recall it and withdraw from using it because of this problem. You have to rent space in a warehouse to hold the product when it is returned, and you have to notify the customers and ask them to return the product at your cost. It takes several additional people to help with the project and creates the need for overtime for several employees. Combined, these accrued expenses will create a financial hardship for you and your business. Product Recall coverage will provide you reimbursement for all these expenses.
We recommend you consider the purchase of this important protection if you are selling products used by others.
About Watercolor Management
WaterColor Management has insured the water industry for over 30 years. Our policies include unlimited defense cost coverage in the event of a lawsuit against you. Call us at (256) 260-0412 or email firstname.lastname@example.org for a quick quote for your Water Business Professional, Products/Completed operations, Pollution and General Liability Insurance.