5 Reasons Why You Need Product Recall & Contamination Insurance

Any business that is manufacturing a product and selling it to a third party has a product recall exposure.

Pet food, bread, salad, lawnmowers and luxury cars are just some of the UK product recalls that have been reported.

You can protect your business against the cost of a recall incident with a Product Recall and Contamination policy. It is a common misconception that product recall cover is included in product liability insurance. This may have been the case for certain policies several decades ago but now it is generally excluded and needs to be arranged separately.

Product recall is now often required by businesses who are looking to trade with larger businesses that demand their partners have cover in place. We have recently assisted a client to arrange cover for this exact reason.

1 Risk Transfer

Operating a Business can be complex, often involving many elements such as taking raw materials through to finished products and encompassing production, preparation, manufacture, storage and distribution. Product Recall Insurance can help to protect against a wide variety of risks including;

  • Accidental Contamination (which could be biological such as bacteria or pathogens, or physical such as dirt, and other contaminants)
  • Accidental Defect
  • Malicious Product Tamper
  • Reputational Damage
  • Product Extortion
  • Government Recall

2 Protect your Balance Sheet

A crisis means a cost but a product recall policy can mitigate the losses your business would have incurred, thereby protecting the business from heavy losses that it would otherwise have incurred.

3 Protect your Brand!

Where would your business be without it’s brand and reputation? It’s a crucial element for any business. A tarnished brand can devastate the ability for any business to recover and trade profitably. Insurers appoint specialists ‘crisis management’ firms to assist with the protection of your brand identity.  This service is also available to policyholders before a claim occurs.  The crisis management team is appointed to help you create a crisis management procedure that will help the business should an incident occur.

4 Stakeholder Protection

A business can have many linked parties that all have an interest in the success of the business. For example, customers, suppliers, regulators, shareholders.  Having recall insurance in place can protect the ‘knock-on’ effect against each of these vested interests.

5 Professional Claims and Crisis Management

One of the key areas, already touched on above, is the protection of the business brand and reputation.  Specialist response and risk management services are utilised to ensure swift and professional action is taken to protect your brand.

Typical Cover

So, what types of costs are likely to be incurred following a recall incident? The items below are not exhaustive and are for illustration only. Full policy terms and conditions are available upon request.

  • recall transportation costs to remove the product
  • product destruction costs
  • replacement costs
  • employee wages for reproduction of stock
  • Consultants costs
  • increased cost of working costs
  • rehabilitation expenses
  • customer costs relating to recall

As always, if you have any queries regarding product recall and contamination insurance please get in touch. We’d be happy to provide further information or to answer any specific queries.

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