Product Recall Insurance

Product Recall Liability

Product Recall Insurance: Offers insurance protection in the event of a recall of an insured’s product. This protection includes coverage for the insured’s product recall expenses and liability to third parties for both finished and component goods.

Product recalls can be voluntary or involuntary and very costly.  A recall may involve numerous expenses including:

• Costs associate with notifying customers, the cost of shipping and disposal of the product, extra warehouse expenses and the cost of extra personnel required to conduct the recall.

• The cost to refund, repair or replace and ship the product back to the customer.

We have a dedicated underwriting staff. Our staff can provide expert knowledge of various recall coverage’s available and tailor our program to fit the requirements of an insured. In the event of a recall, claim expertise and a legal panel are available to guide an insured through government regulations and requirements.

Product Recall Coverage is designed for the following types of operations:

• Machining, stamping, assembly and heat treating operations

• Metal and plastic component manufacturing

• Food and beverage

• Consumer product manufacturing

• Electronic component manufacturing and equipment

• Packaging and bottling operations

• Medical products (Product Recall Insurance)

• Children’s products

• Pharmaceuticals

• Distributors of foreign goods in the United States

Endorsements available to extend coverage include:

• Cost to Refund, Repair or Replace Insured’s Product

• Impaired Property

Minimum Premium: $15,000

Product Recall: Recent Examples

  • In the past few years there has been a noticeable increase in product recalls, and the media’s attention to them, across the globe. Whether it is a manufacturer of finished goods or an importer of consumer, commercial or industrial products, the threat of a recall cannot be ignored. Below are just some examples of recent product recalls.

  • A snack food manufacturer’s operations include the co-packaging of a name brand cookie. Despite the manufacturer’s superior scores from a well-known third-party auditor, human error led to the mislabeling of a batch of the cookies—the batch was not labeled as containing nuts.  Mislabeling of an allergen runs the risk of imminent bodily injury, so the company recalled the batch. The insurer paid approximately $700,000 including the company’s recall expenses and loss of income.

  • A manufacturer and marketer of over-the-counter medication recalled over 500,000 tubes of a topical cream because the tubes were not adequately coated by the tube manufacturer. Without adequate coating, the tubes were porous and permitted air to enter causing the topical cream to become extremely potent. Losses paid by the insurer exceeded $350,000.

As a Result of…

  • A food processing and packaging company recalled thousands of jars of peanut butter in more than 60 countries after it was discovered that the peanut butter led to an outbreak of salmonella. As a result of a rainstorm and two instances of faulty sprinklers at one of the company’s plants, moisture mixed with dormant salmonella bacteria and came in contact with the peanut butter Before it was packaged. The recall cost the company $66 million and it spent over $15 million to renovate the plant where the peanut butter was manufactured.

As a Result of

  • A fish and food processor expected to spend about $35 million to cover costs associated with a recall of chili sauce and other products out of a U.S. unit because of a botulism scare. The costs included product recall, destruction, effectiveness checks, quality inspections, consumer reimbursement, professional services, factory shutdown and startup costs. The company’s chief executive anticipated monthly distribution to resume six months after the incident.


  • A manufacturer and supplier of wet pet foods recalled 60 million cans after it was revealed that the wheat gluten used in production was tainted with melamine, a nitrogen-rich chemical used in the production of plastic. The melamine was discovered only after hundreds of reports of pets becoming sick or dying after eating the wet pet food. The recall cost the company $42 million in addition to the $30 million loss it experienced in sales. Numerous class action lawsuits are now pending in the U.S. and Canada.

As a Manufacturing…

  • A manufacturer of power management semiconductors recalled between $2 million and $3 million worth of its product due to a defective process at one of its vendors. The company reported a $2.5 million loss as a result of the recall.

Contact us for a California Product Recall Liability Insurance Quote or visit our product recall insurance site.

Tel: (877) 225-2699

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