Product Recall

Does your current insurance cover the real cost of a product recall?

The answer to most businesses we speak to is surprisingly (for them) most likely not.

The Risks and Threats to your business

Product recall poses a real threat to your company. The impact from a defection or contaminated product without Product Recall insurance, Contamination Product insurance or Defective Product insurance in place could mean your business loses valuable contracts, suffers financially through loss of sales and reduced confidence, which could spell financial ruin for your company.

IIn addition, there is a risk that directors of a limited company could be held personally responsible by their shareholders or suppliers (for example) for not taking out Product Recall insurance to protect the company. This point always raises more questions and a bit of angst with the directors we deal with. The reason we mention this is that a director has a fiduciary duty to the company (Fiduciary duty means, above all, loyalty to the organisation. Directors also have a duty of care and a duty of management under UK law, but the fiduciary duty is the greatest responsibility, as it means taking responsibility for the interests of others).

We believe the more you understand the potential risks and the exposures your business face, the more informed choice you can make on the best way to protect your business, your customers, your supply chain, your profits and your personal assets.

I have Product Liability insurance. Doesn’t it cover me for Product Recall?

The answer is yes and no. Most likely no in the majority of cases. Some product liability policies can provide limited Product Recall cover.

Why does our business need Product Recall insurance?

We’ve mentioned previously why a business needs Product Recall insurance. Just to recap – to limit the fallout from loss of sales, to mitigate the loss of customer confidence in your product and your brand, help retain hard won shelf-space and to assist with maintaining your supply contracts.

What type of insurance’s are there?

  • Contaminated Product insurance – typically used by food, drink, cosmetics, tobacco and pharmaceutical companies;
  • Defective Product insurance – usually aimed at manufacturers of a wide range of finished goods;
  • Product Recall insurance –