product recall insuranceThe product recall insurance policy can protect businesses against the financial losses associated with the need to recall a product or range of products from the market. The product recall insurance protects the policyholder if the product has caused or is likely to cause personal injury or property damage.

There are many reasons why a business may need to recall a product and these can include;

  • Manufacturing errors such as the omission of a component or product
  • Contamination of the product during manufacture
  • Errors in the design, packaging or storage of the products

Product Recall insurance is particularly prevalent in the automotive, food and beverage, medical and pharmacuetical industries but the need for the cover in other areas is growing

The product recall policy can protect the policyholder against the costs associated with;

  • Notifying customers of the problems and the recall
  • Transportation costs in respect of the return of the products
  • Additional costs incurred in respect of storage of the returned product
  • The cost of the destruction or disposal of the products
  • Additional staffing costs associated with the recall
  • Costs incurred by third parties such as wholesalers and retailers involved in the recall

This is the basis of first party cover for product recall which is suited to products manufactured by or on behalf of the policyholder and products sold or promoted by the policyholder.

In addition to this cover for first party costs cover is also available in respect of third party costs where the policyholder’s product has been included on a component basis in another product manufactured or supplied by another party that required recall and the policyholder is legally liable,

  • Third party costs associated with the recall of a product incorporating the policyholder’s product.
  • Replacement or repair costs of the third party product.
  • Any consequential loss to the third party arising from the recall

The policy does not cover personal injury or damage caused by the product this is the subject of a product liability insurance policy.

Product Recall Limits of Indemnity

The policy is subject to a limit of indemnity, selected by the policyholder, which represents the maximum liability of the insurance company under the policy. As product recall policies are generally written on an aggregate basis the limit of indemnity applies to the aggregate value of all claims in any one period of insurance.

Extensions to Product Recall Insurance Policies

Policies may be extended to include;

  • malicious tampering with products and product extortion by employees of the policyholder and third parties. This cover can be provided in respect of actual product tampering or contamination and also alleged or implied contamination for example in the case of product extortion where cover in respect of ransom may also be available.
  • pre-recall costs associated with establishing whether the products actually pose a risk
  • business interruption protecting against a loss of gross profit arising from the recall

For more information complete the application or call us direct to speak to a specialist broker.


 Product Recall Insurance

0161 300 2930 Blackfriars Group