Product recall expenses are not covered under the majority of standard Public & Products Liability policies. A specific extension or stand-alone policy is generally required in order to be properly insured.
There are two main types of product recall insurance: first party and third party. First party product recall insurance provides cover for your expenses only, whereas third party product recall insurance covers third party expenses. Where you are wholesaling your products, it is essential that you consider covering third party expenses as well as your own as this is commonly where claims will arise.
Extensions that are added to a standard Public & Products Liability policy generally offer a watered-down level of cover, usually only covering your own costs with restrictions around what constitutes a claim.
For full product recall cover, a stand-alone policy is required. Whilst there are substantial differences between the cover offered by various insurers, generally these policies cover:
- Your costs, such as:
- Staff overtime
- PR expenses
- Third party costs, such as:
- Retailer recall costs
- Third party destruction of stock
The broader policies will also offer cover for replacement of stock as well as loss of profits.