Product Recall Insurance

Product Recall insurance is a good idea because it covers costs you won’t have budgeted for, and which could be beyond your control. For example, the policy can be extended to include Malicious Tampering and Extortion which is there to combat risks such as those experienced by baby food manufacturers in 1989 when slivers of glass, razor blades, pins and caustic soda were found in the products of two well-known baby food manufacturers. The scare began with a blackmailer trying to extort $1.7 million from a company, and then escalated as copycats capitalised on the initial report. Simply horrifying!

Just imagine you get advised something has gone wrong. You start with testing and employing experts and/or consultants which could lead to closing facilities or suspending production. From there you have to issue notices to consumers, then transport, store, destroy or dispose of the affected products, replacing ingredients, materials or products. Then there are retailer fees, overtime for employees, crisis communications and PR, not forgetting the ongoing loss of sales or customers and cancelled contracts, plus the impact on your brand and reputation. As you can imagine, the costs could be huge.

The prudent answer is as much as you can afford. Our minimum level of cover is now £1 million but most business buy £2, £5 or £10 million pounds worth of cover.

How long is a piece of string? There are so many factors which go into the premium calculation, for example the nature of your business and what products you supply, both in the UK and globally.