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Product recall events can happen in many industry sectors, where a company’s goods are recalled from the market due to potential safety risks, whether due to contamination, defective products, or product tampering. Such an incident can be a costly and logistically complex process, as well as having the potential to damage your brand and reputation.
Businesses in many sectors are at risk of product recall, including food and beverage, restaurants, pharmaceutical, medical device manufacturing, automotive, and consumer goods. With regulatory oversight expanding, there is particular scope for consumer products to fall short of exacting safety and quality standards. Add to this the increasing complexity of global supply chains; there are liabilities for those involved at each stage of the product journey..
What is Product Recall Insurance?
Product recall insurance protects businesses from the first-party and third-party losses associated with products which have been contaminated or recalled. It is typically purchased by suppliers of mass-produced products, and covers costs such as direct recall costs, replacement costs, loss of revenue or contract, consultancy costs, and third-party financial loss.
The difference between Product Liability Insurance and Product Recall Insurance
Product liability insurance and product recall insurance share similarities in that each type of cover is designed to protect the insured against third-party losses resulting from problems with a product supplied by their company. However, a product recall insurance policy will also look to indemnify the insured for first-party losses too. Furthermore, while a product liability insurance claim is triggered by actual bodily injury or property damage, a product recall insurance claim can be triggered by actual or imminent bodily injury or property damage.
This means that if your businesses has product liability insurance but not product recall insurance, you would only be covered for insured incidents that occur as a result of your defective product. You would not be covered for the many recall costs mentioned above, due to actions designed to help prevent such incidents. So, while product liability insurance policies may go some way to covering your losses, product recall insurance goes a step further to fill in the gap in coverage and help minimise risk exposures.
Here is a summary of cover and exclusions for both types of insurance policy:
|Product Liability Insurance||Product Recall Insurance|
Gallagher’s Product Recall Team
Gallagher has a rapidly growing team of creative and innovative brokers, lawyers and forensic accountants, all with hands-on product industry experience. We can conduct a comprehensive examination of your exposure in order to help you mitigate loss, working directly with some of the leading insurers and underwriters globally to design a programme to respond to your risk.
Whether you require Product Recall, Product Contamination or Restaurant Contamination insurance, we can negotiate coverage to help ensure your business is protected against the financial costs of a voluntary or involuntary product recall event. We understand the obstacles to cost recovery, including limited recall claims experience, confusion around breadth of coverage or contractual language, and the underestimation of reputational damage.
Our team’s focus is 100% on product recall, so you can be confident that you will not only secure a tailored insurance policy, but also have specialists beside you through a crisis event.
Crisis management consulting and loss control
We consider your overall risk management programme to help you manage and mitigate product recall risk, as well as strengthening your response capability.
Our team will map out a comprehensive financial recovery strategy for your business, including a response plan for a contamination event. We offer simulation exercises conducted from both an operational and financial/cost recovery standpoint, with a particular focus on supply chain and business interruption.
We are here to help your business achieve its objectives in going from production to distribution with minimal disruption or loss, while upholding your market share and reputation.
If you would like to find out more or discuss your requirements, please get in touch with our Product Recall team.
Product Recall Insurance
- Cover for first-party and third-party recall costs
- Protection against loss of revenue or contract
- Crisis management consulting and loss control
- Brand rehabilitation