Welcome to LMBF Assurances
Product recalls are fairly common, which can be expensive. Regardless of the type of product you manufacture and/or distribute, whether it is a component or a food product, product recall insurance is essential to protect your business from financial losses that may occur due to the voluntary or unintentional recall of a product you sell. Costs that may result from a product recall may include disposal, restocking, warehouse costs, and shipping costs. Coverage is generally triggered when it is known that an insured product may have caused bodily injury or property damage. LMBF helps your business find the product recall insurance it needs to conduct business without worrying about the potential costs associated with a recall.
Product recall insurance, not to be confused with product liability insurance, is a commercial insurance product suitable for protecting businesses against financial losses resulting from expenses associated with a product recall. Canada experienced over 200 food recalls in 2020 alone — all of which resulted in significant replacement costs, government penalties, lawsuits, and lost sales. With product recall insurance, your business can have peace of mind knowing that in the event of an unexpected event, it is covered.
If there is a known risk of personal injury or property damage as a result of the product you manufacture, your policy may include crisis counseling coverage that helps your business inform consumers and pay for a brand message.
Most product recall insurance policies reimburse manufacturers and processors, as well as their customers for lost profits resulting from the recall. For example, in the case of a food product, your product recall insurance could cover both the purchaser and the processor for losses.
Your product recall insurance policy may include coverage for the cost of cleaning, reprocessing, or pasteurizing a recalled product to comply with regulatory guidelines.
It covers certain costs related to removing a product from the market (logistics, customer notices, destruction/return, crisis management), depending on the policy.
Traceability (batches), quality control, supplier audits, certifications, recall procedures and incident history.
Logistics (returns/withdrawal), communications, distributor management, and operational impact, depending on the sector.
Manufacturers, importers, distributors, private labels, and consumer goods companies (food, cosmetics, parts, etc.).
The ability to quickly identify affected batches, isolate the problem and reduce the scope and duration of a recall.
Generally no. CGL covers third-party damages, while recall costs are often excluded and require dedicated coverage.
