Get to Know Extensions | Product Recall

What is a General Liability Product Recall Extension?

There can be expensive repercussions for a business if their product is defective or suspected to have a defect that may cause bodily injury or property damage. If a product is a risk to safety, a business may be required to notify affected customers and recall their product/s from circulation.

Generally, base General Liability policies do not cover the additional expenses to recall a product. However, Berkley Insurance Australia (BIA) has developed a Product Recall Expenses Extension that can provide a solution to this coverage gap.

What does it Cover?

The Product Recall Expenses Extension can be added to the Product Liability component of a BIA General Liability policy. It indemnifies the insured for reasonable and necessary costs, incurred in respect of recalling products from the marketplace when the products pose an imminent threat of personal injury or property damage.

Some of the costs covered under the Extension include:

• Recall notifications to customers and the public
• Transportation of the insureds recalled products
• Additional costs for overtime or hire of personnel to handle and manage the recall
• Costs of temporary storage if needed
• Expenses required for disposal/destruction of the recalled product

The Extension does not cover the loss of the product itself or the consequential loss of income as a result of the recall.

What businesses can benefit?

BIA’s Product Recall Expenses Extension is not a full-blown recall offering. As such, it may be more suitable for smaller businesses that manufacture or otherwise import products. Brokers should check the operative clause of the relevant policy wording to ensure this type of coverage meets individual client needs.