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Food and retail insurance

Product recall insurance

Product recall insurance covers the reasonable costs and expenses incurred by a business if they have to remove their product from public circulation.

It doesn’t matter what size your business or how stringent your risk management programme you may still experience a product recall.  Product recalls can be expensive, time consuming and may damage your brand. Market share, brand image and consumer confidence are immediately at risk.

Product recall insurance can help ensure your business will survive if a product recall is needed.

Who needs product recall insurance?

Product recall insurance is specifically designed for manufacturers of products used for consumption. This includes:

  • any business manufacturing, supplying or distributing products for human ingestion or use
  • manufacturers, producers, suppliers and retailers of foods
  • manufacturers, producers, suppliers and retailers of pharmaceuticals, cosmetics
  • manufacturers of consumer durables such as children’s toys, whiteware and home appliances

Product recalls can be voluntary or involuntary, as long as the grounds for an imminent threat are met.  

A voluntary product recall could be your company recognising that one or more of your products could cause bodily injury or property damage.  

An involuntary claim could be by a government agency or a third -party retailer or wholesale distributor who sells your products.

What product recall insurance covers

Product recall insurance covers the costs association with recalling a product. Direct costs of recall are often only a fraction of the true cost to the business.

Costs and expenses come in many forms:

  • Recall costs -  The costs incurred in recalling, inspecting and destroying the affected product, as well as advertising and extra labour.
  • Third party recall costs - Costs incurred by a third party where your insured product is an ingredient in their product.
  • Consultant costs -  Costs associated with specialist recall or crisis consultants.
  • Replacement costs - The cost to replace and redistribute the affected product.
  • Business interruption  - Loss of profits and expenses resulting from a possible decline in sales.
  • Rehabilitation expenses - Costs incurred to return sales to pre-incident levels; PR and advertising costs to promote the brand again.
  • Extortion costs - Ransom monies, negotiation costs, loan interest or increased security.

Could you afford to meet the cost of a product recall if you didn’t have cover? Could you lose clients if you’re not insured?

Our brokers can offer you options on protection for a range of product risks including product contamination and general public and product liability. They'll also work with you in the event of a claim to get a fair resolution for your business.

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