Product Recall Insurance for Manufacturers
A product recall can cost millions — and your standard product liability policy won't cover it. Product recall insurance fills the gap, protecting manufacturers from one of the most financially devastating events a company can face.
What Is Product Recall Insurance?
Product recall insurance — also called product withdrawal insurance — covers the expenses a manufacturer incurs when it must recall or withdraw a product from the market. This includes both government-mandated recalls and voluntary recalls initiated by the company to protect consumers.
Standard commercial general liability (CGL) policies and product liability policies explicitly exclude recall costs. Without separate recall coverage, manufacturers must absorb all recall expenses out of pocket — which can easily reach millions of dollars.
What Does Product Recall Insurance Cover?
Types of Recalls Covered
Government-Mandated Recalls
When a regulatory agency (CPSC, FDA, NHTSA, USDA) orders your product recalled, the costs can be enormous. Recall insurance covers these mandatory withdrawals.
Voluntary Recalls
Proactive voluntary recalls — initiated by the manufacturer before a government order — are actually the most common type and are fully covered.
Contamination Events
Food and beverage manufacturers face special contamination risks. Recall policies often include accidental contamination, malicious product tampering, and extortion coverage.
Component-Triggered Recalls
If a component supplier's defect forces you to recall your finished product, your policy covers the costs — including claims against your supplier.
Who Needs Product Recall Insurance?
Product recall insurance is essential for any manufacturer that:
- Sells products to consumers or businesses
- Manufactures food, beverages, or dietary supplements
- Produces children's products (toys, apparel, gear)
- Makes products with electrical or mechanical components
- Manufactures medical devices or health products
- Distributes products through major retail chains
- Exports products internationally
The True Cost of a Product Recall
The CPSC reports that the average cost of a consumer product recall exceeds $8 million. High-profile recalls often cost far more:
Don't Wait for a Recall to Get Covered
Product recall insurance must be in place before a recall event to provide coverage. Get protected today.