INSURANCE COMPANIES ASKING FOR RIGHTS OF RECOURSE FROM CHINA TO GET INSURED TO SELL FUNCTIONAL MUSHROOM POWDER IN THE UK.

[Purejoydan49]

Hi everyone, this is my first post. I’m launching my first business, a functional mushroom powder online store. I’ve imported mushroom powder from China, I’ve had it third party analysed in the uk by a U.K. lab, it’s been certified safe and correct, all good. I’ve now been told by an insurance broker I can’t get insurance unless I have a right of recourse from my supplier in China. I have asked my supplier if they can provide this. However surely having my mushroom powder products third party tested in the uk and certified safe should be good enough for insurance companies to give me insurance. Any advice would be greatly appreciated on this matter as this is the only thing holding me back from launching. Many thanks Jordan

 

[Newchodge]

Hi everyone, this is my first post. I’m launching my first business, a functional mushroom powder online store. I’ve imported mushroom powder from China, I’ve had it third party analysed in the uk by a U.K. lab, it’s been certified safe and correct, all good. I’ve now been told by an insurance broker I can’t get insurance unless I have a right of recourse from my supplier in China. I have asked my supplier if they can provide this. However surely having my mushroom powder products third party tested in the uk and certified safe should be good enough for insurance companies to give me insurance. Any advice would be greatly appreciated on this matter as this is the only thing holding me back from launching. Many thanks Jordan

Ask the insurance company to change their mind? Ot ask the supplier to comply. Those seem to be your only options.

 

[fisicx]

One for @Frank the Insurance guy methinks.

This came up in another thread (for electronics) and the only answer was to get the right of recourse. Essentially it means the supplier takes joint responsibility should there be a problem. I suspect the supplier won't agree to this.

 

[IanSuth]

@MOIC may know more on this as well , but being totally realistic, what chance has anyone got of chasing a chinese supplier in the Chinese courts and getting anything ? And if you can't do that the promised "right of recourse" is worthless anyway

 

[fisicx]

Found a thread about this:

Rights of Recourse - Importing from China

Hi everyone I'm trying to get product liability insurance for some bamboo products (e.g. soap dishes) I import from China. The insurance company have quoted me £180 for the year if rights of recourse are in place or £800 if rights of recourse are not in place. So I've been trying to get rights...

www.ukbusinessforums.co.uk

Note the huge increase in premium and this was for a bamboo product. I suspect they will want a lot more for mushrooms (for which the chances of dodgy inclusions is very high).

 

[MOIC]

Any food product being imported has regulations to comply with, apart from a test certificate.

As above posts have indicated, you’ll have little chance of China factories agreeing to rights of recourse.

You can try.

 

[fisicx]

I’ve had it third party analysed in the uk by a U.K. lab, it’s been certified safe and correct, all good.

No. You have had that batch certified. I'd put money on you needing testing on every batch.

 

[Frank the Insurance guy]

I’ve now been told by an insurance broker I can’t get insurance unless I have a right of recourse from my supplier in China.

Correct, this is required - I have posted some advice on this here: https://www.ukbusinessforums.co.uk/...urse-importing-from-china.392385/post-3179189

In short - what does your contract with the supplier say? Does it exclude or waive your rights of subrogation? As long as you are not excluding/removing your rights of subrogation or providing an indemnity to your supplier, you will be fine (the contract does not have to specifically confirm rights of recourse are in place, as I understand this is in place automatically, unless excluded etc)

surely having my mushroom powder products third party tested in the uk and certified safe should be good enough for insurance companies to give me insurance

Great that you have it tested in the UK. You will need to continue to have it batch tested. If every single shipment is tested, the rights of recourse can be against the UK tester, instead of the supplier - but I'm sure you won't be testing every sale, therefore rights of recourse will need to be maintained with your supplier.

On another note - you may need some specialist (ie. expensive) insurance policy due to the nature of the goods you are selling.

 

[Karl Tao]

Consider a realistic problem. Even if the Chinese supplier agrees to recourse, the possibility of you being compensated by the insurance company after an accident becomes zero. The insurance company uses this as a reason to require you and the supplier to share responsibility. This will become an international litigation. Things are getting more and more complicated...

 

[Frank the Insurance guy]

Consider a realistic problem. Even if the Chinese supplier agrees to recourse, the possibility of you being compensated by the insurance company after an accident becomes zero. The insurance company uses this as a reason to require you and the supplier to share responsibility. This will become an international litigation. Things are getting more and more complicated...

Ignore this rubbish. So many errors and there certainly is no "sharing responsibility" with the supplier!

As long as you do not waive or remove your rights of subrogation against the supplier, your insurer will pay a claim made against you relating to the product.

If the claim relates to an issue with the product (ie. the supplier was negligent in some way), the insurer will still deal and pay the claim. They then have the right to pursue and take legal action against your china supplier, in your name, in an attempt to recover the cost of the claim. In my experience Insurers will not usually bother with taking legal action against a company in China, but they must still have the right to do so, if they want to!

 

[Karl Tao]

Yes, my English expression is like rubbish, I have to admit this. I am learning English in the UK.
Yes, you answered the standard answer. Hopefully, everything will be carried out according to standards. Insurance costs are included.