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Product recall insurance

An ‘extra expense’ cover indemnifying the insured for costs incurred in recalling a product suspected of being injurious to customers and users. Recall costs include communications, transport, warehousing, inspection, overtime, even destruction and so on. Cover is triggered by the decision of the insured to recall the product because of its potentially harmful nature. Cover applies to accidental causes not design faults. Companies should maintain a product recall plan.
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Insurance which indemnifies the insured for the cost of recalling products known or suspected to be defective.

Product Recall Insurance for Liability Insurance

The policy indemnifies the insured for recall expenditure incurred by insured. The cover includes costs such as customer notification, shipping costs and disposal costs. Coverage generally applies to the firm itself though additional coverage can be purchased to cover the costs of third parties. This policy is usually purchased by manufacturers such as food and beverages, toy, automobile parts manufacturer and electronics companies.

Product recall plan

A manufacturer’s plan to enable him to action a product recall situation immediately on becoming aware that it is necessary or prudent to withdraw a dangerous product. Tracing, identifying and handling products need to be pre-planned to minimise cost and risk. The plan is a vital risk management tool.

Product tamper insurance

Protects manufacturers who are the victims of product contamination or the threat thereof. The insurance pays the cost of stock destruction, business interruption and product rehabilitation. There is no cover for third party injury (see PRODUCT LIABILITY INSURANCE) or extortion payments (see PRODUCT EXTORTION INSURANCE). Consultancy services are usually available through the insurer. Food manufacturers and leading retailers are the most likely victims.