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Can my China supplier’s liability insurance cover me if there is a recall in USA?

Posted: 2015-02-25

Full Question

How do suppliers in China provide liability insurance to cover the buyer in case of a recall? Please advise what options are available.

Answer

Unfortunately, it is very rare for a Chinese supplier to have coverage for liability in the USA, for example. I see from your website that you have various products aimed at children which are under your brand and your design.


It’s hard for a Chinese company to get overseas coverage in the first place, let alone for a product they manufactured but didn’t design or brand.


Even if the factory finds a way to get liability insurance, if God forbid a child in the US gets hurt with your product or there is a recall situation, the US lawyers aren’t going after an overseas supplier. They will come knocking on your door as you are the importer of record and it is your responsibility to ensure that the product is safe and compliant with US standards. And it will be another fight altogether for you to deal with the factory and their insurer to try to get compensation out of them!


Without knowing the details of your specific case, but based on my experience importing toys and medical products, I would advise the following:


1. Arrange your own US-based coverage. Perhaps you can pass on this cost to the seller if you have buying power.

2. Make sure the designs are fully compliant and you don’t have a safety issue. The major labs can do the testing and give you peace of mind.

3. It’s not enough to complete the lab testing and produce certificates; you also need to make sure actual production matches the sample which passed the safety tests. So ongoing production inspection is essential. If you need some pointers on QC just start with this video: Video 4: Project Management and Quality Control


Here is an article I wrote on compliance for your reference: Product Certification and Compliance: The Key Steps.

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