A Product Recall is the act of removing a batch or production run of products from the marketplace. The trigger to activate Product Recall Insurance is when the products in question pose an imminent threat of bodily injury or property damage.
Product Recall vs. Product liability insurance.
Product liability insurance and product recall insurance are sometimes confused. Product liability insurance is coverage for third-party liability claims for physical damage or injury arising from defects or problems related to products. This coverage can be through a stand alone product liability policy or CGL. Product recall are sometimes available on product liability policies, but they cover only recall expenses.
Comprehensive product recall insurance, on the other hand, is separate, first-party coverage for the insured’s economic losses resulting from product recalls. Comprehensive recall policies also cover third-party liability related to financial loss resulting from recall of the produc. There are three basic elements of comprehensive product recall insurance policies: They are Indemnification for recall costs, Lost revenue and Crisis management services.
Product recall vs product guarantee insurances.
Product recall insurance will only come into effect if the product being manufactured or supply has an imminent threat of bodily injury or property damage. Product guarantee insurance will respond if there is a problem with the product, whether it is dangerous or not.
Two parts of comprehensive product recall coverage
First Part ( direct expenses or first party expenses)
Second Part ( third party expenses)
Optional additional endorsements available.
Understanding the Product Recall Trigger.
Product Recall Insurance provides protection in the event any of your products pose an imminent threat of bodily injury or property damage. It does not provide coverage for defective products that simply do not work and are not a threat to cause bodily injury or property damage. In other words, the trigger for Product Recall Insurance is the same for Product Liability Insurance – bodily injury and property damage. As long as the property damage or bodily injury trigger is met, recalls can be voluntary or involuntary. A voluntary trigger would be your company recognizing that one or more of your products could cause bodily injury or property damage and you want to remove the product before it creates a potentially more serious product liability claim. An involuntary claim is typically imposed by a government agency or a third party such as a retailer or wholesale distributor who sells your products.
Product Gurantee Cover:
Product Guarantee can be either a first party cover in respect of the cost of repair, removal, replacement and/ or treatment of products failing to perform their intended function or a third party cover where the other party suffers financial losses following the non-performance of your product. Depending on whether the risk is of the first or third party kind, it can include the costs of rectifying the product, the legal liabilities arising from a third parties financial loss and the costs and expenses suffered by either parties within the claim like…
Contaminated Product Cover
Whether it is accidental, alleged or malicious, product contamination can negatively impact your company’s reputation and profitability.