Do you need Product Recall Insurance?
Product Recall Insurance covers expenses associated with recalling a product from the market. It provides protection in the event any of your products pose an imminent threat of bodily injury or property damage.
- Manufacturing errors such as the omission of a component or product
- Contamination of the product during manufacture
- Errors in the design, packaging or storage of the products
Who requires this cover?
Product Recall insurance is typically purchased by the automotive, food and beverage, medical and pharmaceutical industries but the need for the cover in other areas is growing
What does the policy cover?
- Notifying customers of the problems and the recall
- Transportation costs in respect of the return of the products
- Additional costs incurred in respect of storage of the returned product
- The cost of the destruction or disposal of the products
- Additional staffing costs associated with the recall
- Costs incurred by third parties such as wholesalers and retailers involved in the recall
Which industry has the most claims?
Research conducted by insurer Allianz in 2017 found that automotive companies are the most likely to make claims under product recall policies, followed by food & drink and domestic appliance manufacturers; this is not surprising given the obvious risk to consumers posed by such products if defective. Perhaps more surprising is the finding by Allianz that the average cost of a product recall claim was €12.4m in the automotive industry and €7.9m in the food industry.
By Lauren Quincey ACII, Chartered Insurance Broker
Corporate Account Handler