PRODUCT RECALL INSURANCE
Product Recall Insurance is a policy designed to help get a defective product back under the control of the manufacturer or merchandiser that would be responsible for the bodily injury (BI) or property damage (PD) caused by its continued use or existence.
Here’s what you need to know about Product Recall Insurance:
A standard product liability policy contains a “sistership liability exclusion” that is now commonly known as the “product recall exclusion”
A manufacturer’s customer will not regularly require the manufacturer to carry product recall coverage but a recall is not a physical damage event and will not trigger any standard insurance policy
Whether a recall is caused by malicious contamination, accidental contamination or unintentional error or products extortion, a company can have a dramatic decrease in sales and may be closed down by government regulators for a long period of time
Certain product recall policies can reimburse a company for loss of revenue and various expenses including product retrieval, product replacement and pre-recall continuing expenses like rent, utilities and continuing payroll
Some product recall policies include a crisis management component to help business owners during an overwhelming process of government regulators (CSPC, DOT, USDA, FDA, CDC) demanding extensive amounts of unusual information