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What Is Product Recall Insurance

Product Recall Insurance is designed in order to provide protection for your business in case of recalling a product which is known or alleged to be defective. Usually the procedure of product recall is practiced due to safety issues. If your negligence in the product output is admitted, you will be imposed costly legal penalties. Thus, Product Recall Insurance provides coverage for the expenses for the recalled products and liability coverage to people whom you have to pay for damages the product could cause to property or for bodily injuries.

In accordance to what has been said, Product Recall Insurance usually comprises two parts. Part A covers the first party expenses caused by the product recall including costs necessary to withdraw the product from the market and to hire additional costs, costs associated with notifying the customers, travel costs and disposal expenses. Part B covers damages to a third party, i.e. it indemnifies all the costs and expenses a customer incurs on buying this product. Any litigation expenses resulting from the product recall are also covered by Part B.

If running your own business you purchase Product Recall Insurance, it is a clear sign that you are willing to take action on any safety issue arising thus ensuring that your products are of high-quality and your customers are protected.