Product recall Insurance

What is product recall Insurance?

•It provides protection for a manufacturing business against the very real risk of having to recall their products;
•It can cover the cost of recovering the products as well as the cost to repair or replace them;
•It can cover the insured’s customers’ costs as well;
•It can protect your company’s bottom line by covering lost profit;
•It can pay for advertising costs to get your sales back up to pre-loss levels.

Product and public liability policies don’t provide this cover!

Liability policies tend to either exclude product recall entirely or provide very narrow coverage for a small limit. Based on our current understanding and the policies we have seen, the coverage provided under any other policy for recall/contamination events, if any, is negligible. If you, or a supplier, are in the supply chain of a product then recall/contamination insurance is very often a key gap in insurance.

All manufacturers have a product recall risk, which is typically not insured!

•It typically isn’t covered by your liability insurance;
•The actual recall costs are a small prcentage of the overall loss. Loss of sales is the biggest driver of any recall claim;
•Suppliers can’t be relied on to pick up the costs, why would a manufacturer choose to rely on someone else’s balance sheet having sufficient funds to pick up a loss?
•This cover is no longer the unaffordable coverage. What business will insure every aspect of their exposures, from employee to plant, but leave out the actual product which drives both their income and profit?
•Human error and external factors means that no matter how good a company is at product quality, they simply cannot avoid all risk;
•Risk management isn’t about being reactive, it is about being proactive. Buying an insurance policy for an possible recall event is a smart move.