Product Recall Insurance

Product Recall Insurance is exactly what it sounds like. It covers the cost of recalling a product, including product loss, costs to withdraw the product from the market, product disposal, product testing, and crisis management costs. This is a key coverage because it comes at a time when a business is facing a potentially devastating financial moment including possible bankruptcy.

Is Product Recall Insurance Coverage Included within Standard Property and General Liability Package Policies?

Product recall coverage is typically not included within standard property and general liability package policies. It is usually purchased on a standalone policy, and often through an insurance carrier who does not write the other lines of coverage.

Who Benefit from Having Product Recall Insurance?

Every company that produces or manufactures a product can benefit from having this type of coverage. This is especially true for businesses that rely on one or two key products for a majority of their annual revenue.

Recall Insurance Policy Coverage Provisions

These types of policies include the following coverage provisions:

• Recall Expense
• Replacement Cost
• Lost Profits
• Brand Rehabilitation Expense

Recall Expense Coverage

Recall expense covers the out-of-pocket expense associated with a large-scale product recall. It can include costs like overtime wages, public safety messages, public relations expenses, crisis management costs, special testing, and destruction.

Replacement Cost Coverage

Replacement expense covers the cost of replacing the recalled product. It can include the cost of labor and overhead tied to production of the new product as well as the cost of materials.

Lost Profits Coverage

Lost profits coverage reimburses for the profits which would have been earned had the recall not taken place. It can also pay for profits that would have been earned on future sales had their been no recall event. The coverage is usually capped within a certain period.

Brand Rehabilitation Expense Coverage

Brand rehabilitation expense coverage will pay for costs tied to the necessary rehabilitation of the product brand or company brand. This includes the cost of marketing and extra advertising expenses.

Do Product Recall Insurance Carriers Offer Risk Engineering Resources?

Yes, carriers who offer product recall coverage can also provide key risk engineering resources to help companies build out robust product recall guidelines and procedures. Having the coverage and carrier resources can be key in keeping a company in business and in good financial standing.

Have any questions or want to discuss product recall coverage in more detail? Let’s chat!

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