Product Recall Liability

If you are a manufacturer, processor or distributor of goods you should have Product Recall Liability insurance. A Product Recall Liability policy protects your business from the significant financial and reputational costs associated with a product recall.

With over 21 product recalls in Australia over the last two months alone, the importance of Product Recall insurance is ever growing.

Whether it be products like food, beverages, cosmetics, electrical equipment, pharmaceuticals, or household appliances the product recall process is extremely expensive, and can be highly damaging to even the largest companies.

A Product Recall Liability policy is there to cover you for the costs associated with a product recall:

Cover for the cost of withdrawing products off shelves
Cover for the cost of replacing the recalled product on shelves with ones that are deemed safe
Cover for expert advice and assistance on managing your brand reputation in the public domain. Product recalls are increasingly receiving widespread media publicity.

Product Recall Liability will look to significantly reduce the impact a product recall can have on your organisation, empowering you to make decisions for the future of your business with greater confidence.

Please Note: Below are some of the more common insurance policy features, however, the list is not exhaustive and some features may not be offered by certain insurers. Please refer to the insurer-specific policy wording for inclusions, exclusions, terms and conditions.

Covered Features

Recall costs (first party)

The costs incurred by you to recall/withdraw a product.

Recall costs (3rd party)

The costs incurred by a 3rd party to recall/withdraw your product.

Accidental contamination

Cover provided for inadvertent or unintentional contamination or mislabelling of products.

Business Interruption

Loss of gross earnings or additional expenses incurred as the result of a recall event.

Reworking Costs

The costs to restore or replace lost product.

Product Extortion

The threat of or malicious product tampering of products with a demand for monies.

Specialist

FAQ's:

I supply a product to a client, it's recalled and I receive a bill for their costs, is this covered?

Yes, provided your policy includes third party recall costs it will respond.

If a third party claims my product caused damage to their finished product, will this be covered?

There may be some coverage available under your recall policy but this is more likely to trigger a products liability policy as it is 3rd party property damage.

Will policy respond if a product & labelling is incorrect e.g. label omitted product contains nuts?

Yes, mislabelling is covered under the product recall liability policy and this error has the potential to cause bodily injury to a member of the public and as such the policy will respond.

Third party is not satisfied with my product and claims it is not fit for purpose, will policy respond?

No, in order to claim under the policy the product has to have or have the potential to cause bodily injury or property damage. This is not the case in this scenario and as such no cover would apply.

What should I do with a large volume of recalled product sitting on my factory floor?

The product recall liability policy provides cover for the additional costs incurred to destroy a recalled product.

Will policy respond if authorities advise I need to publish details in the press to effect a recall?

Yes, the policy covers costs associated with advertising, announcements and correspondence required to effect a recall.