Product Recall Insurance

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Product Recall Insurance
See also

Product Recall Insurance is "an extra expense cover indemnifying the insured for costs incurred in recalling a product suspected of being injurious to customers and users. Recall cost include communications, transport, warehousing, inspection, overtime, even destruction and so on"[1]. Cover is caused by the verdict of the insured to recall the good as a consequence of its potentially harmful character[2].

Examples of goods that may be touched by a recall event contain[3]:

  • Automobile components
  • Agricultural equipment
  • Cleaning products
  • Cosmetics
  • Construction materials
  • Food & beverages
  • Household appliances
  • Industrial tools
  • Pharmaceutical goods
  • Recreational equipment
  • Toys and other children products
  • Veterinary products

General public insurance programmes as well as product liability insurance programmes will generally cover consequent injury or harm caused by faulty product, nevertheless it will not cover the cost of recalling or exchanging the damaged good[4].

Basis of the cover

The kind of cover, range of policy wording and also policy restrictions possible differ among the insurers and rely on the kind of business and goods included. The cause of cover for product recall insurance is generally a choice made to recall goods because it might or has resulted in damage to people or harm to property. It can be also a result of a statutory authority command. Additional policy cause may be a break of a contractual specification when it has been estimated that good default in accomplishing the duty it has been produced for[5].

Insured events according to the policy can contain[6]:

  • Error in the design, manufacture, production, processing, preparation, assembly, blending, mixing, packaging or storage of a product
  • Error in the labeling of a product including mislabeling, and misprinting of ingredients or instructions
  • Accidental omission of a component or substance in the manufacture of a product
  • Accidental introduction or substitution of a component or substance during the manufacturing process
  • Actual or threatened intentional and malicious alteration or adulteration of a product by a third party and/ or employee
  • Creation of adverse publicity implying the alteration or adulteration of a product so as to give the public the impression that they have been or are likely to be rendered dangerous or unfit for use.


  1. C. S. C. Bennett, (2004), s. 249
  2. C. S. C. Bennett, (2004), s. 249
  3. B. Graeme, (2007), s. 272
  4. B. Graeme, (2007), s. 272
  5. B. Graeme, (2007), s. 273
  6. B. Graeme, (2007), s. 273


Author: Faustyna Nowicka