Product Recall Insurance

Product Recall Insurance provides protection for you in the event you must recall any of your products. Coverage can include product recall expenses and liability to third parties seeking damages because your product recall could cause a loss of income or damage their reputation.

If your product poses an imminent threat of property damage or bodily injury, Products Recall Coverage should respond. It will respond to voluntary or involuntary (government or third party-imposed) recalls that satisfy the policy trigger.

The Two Parts of Product Recall Coverage

Coverage A, First Party Expenses and Coverage B, Third Party Liability.

Coverage A covers the following Direct Expenses associated with your product recall:

  • Cost associated with notifying customers
  • Shipping Cost
  • Extra warehouse and storage expense
  • Actual cost to dispose of the product
  • The cost of extra personnel required to conduct the recall

Coverage B covers damages of a third party sustained due to a product recall attributable to your product. This covers your legal obligation to pay compensatory damages. Costs include but are not limited to:

  • The recall expenses of any third party for the recall of any product that incorporates your product including the cost to repair or replace such product
  • Business Interruption losses of others resulting from the covered incident
  • The cost to repair and rehabilitate brand reputation
  • The additional cost to purchase substitute goods to replace your products

Why You Should Consider Purchasing Both Coverage A & B?

Coverage A & B should be purchased together if any of the following conditions exist:

If there is a third party between your company and the ultimate consumer because the third party can claim loss of income or reputation due to the recall
If your company manufactures a product that is sold under a third party’s name. This could be a component or the finished product

The only time Coverage B may not be needed is when you sell products under your own label or a third party is not involved. It is also important to note that Coverage B will not cover any direct expenses you could incur such as replacement parts, repair, retrofitting or disposal if
the recalled product is returned to you for handling.

If you would like to talk to us about any of the above then please do not hesitate to Contact Us.