What is Product Recall  Insurance?

Product Recall

A Product Recall is the act of removing a batch or production run of products from the marketplace.

Product recall insurance covers expenses associated with recalling a product. Product recall insurance is typically purchased by manufacturers such as food, beverage, toy, and electronics companies.

Product recall insurance reimburses policyholders for financial losses sustained when a product is recalled. Product recalls can be involuntary (required by a regulatory agency or the government) or voluntary (the manufacturer notices a defect that is unlikely to force an involuntary recall), and can be costly.

What is covered?

The insurance  is to cover costs such as:

  • Customer Notification– Informing each customer that has bought that product to not use the product and inform the company to be recalled.
  • Shipping Costs: Transportation to get all the products back to main manufacture.
  • Warehouse and Storage expenses: the company may need to hire more storage to store the recalled products.
  • Disposal Costs: to safely dispose the product without causing any more harm when disposing.
  • Over Time Work: where the company has to pay their employees over time to solve the problem.
  • Brand Repair: cost to help the business re-grow from the recall incident

What should you know?

A product recall can have long-lasting and costly consequences for your business ,affecting the reputation, productivity and employee morale. It is important to avoid product recall by

  • Understanding product safety standards and regulations within your industry.
  • Assessing manufacturing process and safety.
  • Performing regular quality checks
  • Being prepared for the worst , having a plan  and insurance to execute the plan if things do go wrong.


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