Product Liability Insurance For Recalls

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Unfortunately, every business owner can face a product recall and there’s no knowing when it will happen. The smallest mistake may cost you thousands of dollars and your business could be making up for the financial strain in the coming months or years. While it is a common business practice to include product liability insurance to your business plan, you may want to consider adding a product recall endorsement and give your business an extra layer of protection. Not sure how a product recall endorsement can be beneficial in your business? We broke down the types of recall business owners face, what it covers, how to file a claim, and recalls from actual businesses. Check it out.


What is a product recall endorsement?
Simply put, an insurance endorsement is an addition or change to an existing insurance policy. A product recall endorsement is designed to cover involuntary or voluntary recall costs.
  • Involuntary recall: An involuntary recall means that a regulatory or government agency requires business owners to remove a certain product off the shelves.
  • Let’s say the Food and Drug Administration (FDA) issued a statement saying that CBD oil is dangerous and products will not be sold in the U.S. starting in the next few months. Business owners who manufacture, distribute, or sell products with CBD oil would need to go through an involuntary recall.
  • Voluntary recall: This type of recall occurs when a business owner deals with an issue with their product and decides to remove it from the market.
  • Here’s an example, a customer purchases an e-cigarette from you and it explodes. Unfortunately, the explosion causes third-degree burns and the customer needs to be hospitalized. Due to this incident, you decide to recall the latest batch of e-cigarettes and move forward with a voluntary recall.
You can include a product recall as an endorsement to your product liability insurance policy with Insurance Canopy.
What does product recall cover?
Whether you deal with an involuntary recall or a voluntary recall, there are going to be costs associated with removing your product from the market. Depending on the severity of the recall, you may have to pay for the following:
  • Transportation
  • Hiring extra people to manage the recall
  • Product disposal
  • And more!
How To File A Claim
  1. Let your carrier know that you are dealing with a product recall
  2. Fill out the claim form
  3. Submit expenses spent on the recall
  4. Be patient!
Each carrier has a different claims process and can take a few business days before the process starts. Be sure to check with your insurance provider before starting the claim process.
Product Recall In The News
Aqua Sock: Old Navy, a clothing company, recalled 34,000 aqua socks in the US because they were creating a slip and fall hazard. Two customers sustained minor injuries and did not need medical attention. Read more here. Bed Frame: Samuel Lawrence Furniture recalled their headboards and footboards because pieces detached and posed a hazard to customers. The company had to recall 2,400 bed frames in the US and 100 in Canada. There was only one report of a man injuring his foot when the furniture detached. Read more here. Step Stool: Molenaar, promotional product company, distributed plastic step stools to various companies as promotional products. The company recalled 3,700 step stools because they tend to break or collapse when in use. Read more here. Arthritis Medication: Merck, a drug manufacturer, recalled arthritis medication because it increased the risk of heart attacks among users. Read more here. Coffee Machine: Keurig, coffee maker company, recalled over 7.2 million brewing machines because there were complaints about the machine overheating. Read more here.
Product Liability Insurance For Recalls
Even though you can’t predict the future of your product, it’s important to understand that mistakes can occur and it can be expensive. With a product recall endorsement added to your product liability insurance policy, you protect your investment. Product recall is designed to respond to recall-related costs while product liability covers third-party claims against product defects. With multiple coverages protecting your investment, you can rest easy knowing that you won’t have to face a financial strain on your own and keep moving forward in your operations. We created Insurance Canopy for business owners like you in mind and our agents can tailor a policy that fits your needs.

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